Sometimes I get invited to small gatherings, usually media roundtables. There, I'm not looking for great stories, but I sometimes network and find nuggets of inspiration for these blog posts. At worst, you can eat a nice breakfast or drink a glass of red wine, and at best you'll get a feature or story angle.
But after attending a recent fintech roundtable focused on consumer payments, I found myself staring at a blank screen, despite having 30 years of experience reporting on technology used in finance. I wondered if what I wrote would portray me as a grumpy old journalist. financial services space.
Or will it shed light on deeper issues creeping into fintech? Developers of new innovative products are given authorized answers in superficial, platitude-filled corporate communications to real questions about the impact of regulation and the role these new services will play in broader society. The problem of providing.
Discussions of fintech, whether in wholesale or retail markets, typically include reference to how emerging technologies and innovative business models will impact 'legacy banks'.
Considering the future of “legacy banks” is currently a common and completely legitimate topic in fintech (and kind of my bread and butter). However, if someone is going to discuss how technology, behavior, and regulation impact an established sector, it is important to have a basic knowledge of how that sector operates. I feel that it is necessary.
Banks serve a specific purpose in society and are therefore subject to a different set of regulations than other sectors that also serve consumers. Banking is often not everyone's favorite business. “I like” and “my bank” rarely appear in the same sentence (#HugABankerToday 😉 ).
We trust banks with our money because they are safe and regulated organizations. Viewing banks as just another consumer brand, subject to the same customer behavior as hoarding a trendy water bottle or a pair of trendy jeans, challenges how the world's financial services operate, both wholesale and retail. This is a dangerous and fundamental misunderstanding of what is happening.
Recently, I attended a fintech gathering where a journalist asked three senior leaders how the UK's upcoming push payment fraud regulations would impact the entire fintech ecosystem. Ta.
To this question, well… *crickets* (Three people needed to be told exactly what the regulations were. These are people working in the global retail payments sector).
At the same event, embedded finance CEOs asked if they were just distributors of financial services (perhaps in the same way that Facebook and YouTube are just distributors of content) and where their responsibility to consumers lies. it was done. (This is another UK regulation that anyone involved in this area should be aware of, especially when it comes to consumer duty.)
The answer I got back started with, “You need to believe in the art of possibility…” and it was all downhill from there. One of the partner's girlfriends at the table also said, “Technology is evolving rapidly…” and this paytech guy, his third member of his trio, responded, “Technology is evolving rapidly…”[Well known consumer brand] It's not just about partnering with someone. ”
None of the above makes any sense and, more importantly, does not answer the question. Embedded finance or banking as a service, or however you want to describe it, is not just a trend that changes ownership of the customer. It has implications for ultimate regulatory responsibility. The three fintech leaders at this roundtable did not have a clear answer to this fundamental question about BaaS, not because they refused to answer it, but because they did not have an answer. That's what I think is dangerous.
I know not every journalist is as much of a payments fanatic as I am. But the people around the table were asking smart questions about regulation, customer impact, and financial literacy. These answers were handed out like nuggets of wisdom: trite, meaningless phrases straight out of the techie's cliché handbook.
“Young people would rather go to the dentist than the bank.” Really? What exactly does that mean? Even the much-derided traditional banks now allow customers to do almost everything through apps. Dentists cannot accurately perform root canal treatment using Zoom. Of course, people visit dentists more than bank branches. The reason has nothing to do with whether people like their bank or not.
At one point, one of the group held up his cell phone and said to me, “This is what's driving the change in customer behavior.” I had to struggle to keep a straight face instead of breaking down laughing. He doesn't need to have been a technology journalist for 30 years to realize how smartphones have changed customer behavior around the world.
I realize that with this rant I am treading into the territory of the aforementioned grumpy old journalist. But today is UK Fintech Week, so my passionate plea to the industry is this. Understand the regulations that have and will impact your industry. Understand that when it comes to financial services, customers don't want to be dazzled. They want safe, easy-to-use, comprehensive products that meet their specific needs, when and where they need them.
And make an appointment with your dentist right away. Proper oral care should not be ignored.
Liz is an associate editor at The Banker. You can connect with Liz on LinkedIn and follow her on Bluesky.
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