G2A PAY (GP): Could you please shortly introduce Mobey Forum and its industry objectives to our readers?
Elina Matilla (EM): Mobey Forum is the global industry association empowering banks and financial institutions to shape the future of digital services. Our unique community of global experts, combined with our culture of open collaboration and frank discussion, enables our members to understand the real issues shaping the future of the digital financial industry, with the ultimate goal of inspiring strategic insight and actionable takeaways to keep them ahead of the curve.
GP: What are your main takeaways from this year`s Money 2020 US edition?
EM: As always, Money 20/20 featured a packed agenda, but a clear unifying trend across all the various tracks was the increasing importance of collaboration.
In the digital economy, consumers demand products and services that make their lives easier. Yet, the siloed approaches prevalent across the traditional financial services industry are the antithesis of the joined-up thinking needed to deliver seamless, experiential and personalised customer journeys.
A more holistic approach is required, therefore. Importantly, we are already starting to see successful ecosystem integrations that bundle complementary services from banks, fintechs and non-banking players together into a single, unified offering (an example offered at Money 20/20 was the combination of a taxi ride, a hotel check-in and a dinner reservation).
GP: You mentioned fintechs. How is fintech reshaping banking and what are some of the challenges and opportunities in this respect?
EM: Banking is amid an ‘iTunes’ moment, with new players entering the industry and forcing the incumbents to reconsider their position and the prevailing business models. Only a year ago, fintechs were considered a threat. But with banks starting to embrace the ‘ecosystem mindset’ on display at Money 20/20, potential threats are being transformed into opportunities.
There is growing recognition that banks and fintechs have complimentary, not competitive, roles. Of course, careful consideration is essential when evaluating potential partnerships to ensure they are mutually beneficial. Yet, caution should be tempered by the urgent sense that if banks don’t seize the initiative, we can be certain that the ‘bigtech’ giants will.
GP: Innovation in the industry: from your perspective, what does it stand for?
EM: Innovation is an attitude. Change is coming, whether banks like it or not. The ability, and most importantly willingness, to harness rapid technological advancements, regulatory requirements and evolving consumer behavior will be the key differentiator.
Innovation also takes many forms. Yes, it relates to shiny new products and services, but it also encompasses the restructuring and cultural shifts needed within large, inherently conservative organisations to deliver for a new generation of consumers.
Finding new ways of doing things should also extend beyond internal processes. Evolving business models and the adoption of a collaborative approach not only with fintechs, but with other banks as well, is key to moving forwards. The good news is that banks are embracing this mindset. Indeed, Ripple highlighted at Money 20/20 that some of their most innovative partners were banks. This will stand them in good stead for the future.
GP: What`s your take on the current industry trends?
EM: For banks, the main trend can be defined by one word. Opportunity. Open banking has been the watchword for the past couple of years, and banks are now moving to formalise their strategic positions. Within the emerging ecosystem, banks can choose to be ‘distributors’, leveraging third-party services to enhance their product portfolio. They can also be ‘producers’ and develop their own services to be distributed by third-parties (as well as through their own channels), extending the reach of their core products. Banks can also leverage and capitalise on easier access to data by becoming information ‘aggregators’ or ‘providers‘.
There is also the potential for diversification. For example, truly convenient, secure and scalable digital identity solutions have proved elusive to date. Banks are trusted institutions with a proven record of establishing and verifying identity to protect assets and transactions. And as banks already create strong digital identities for their own services, they have the regulatory know-how and established processes in place to play a key role within the identity management ecosystem.
The growing maturity of previously nascent technologies is also key. Banks and financial institutions are beginning to take their first steps on the road to creating their own strategic approach towards virtual currencies, for example. Similarly, banks are identifying roles, use-cases and business models to harness the transformative impact of the Internet of Things. These are potentially significant growth areas for banks.
GP: How do you envisage the future of digital financial services 2-5 years from now?
EM: Banks can expect further disruption, particularly in areas that have not been traditional focuses, such as underbanked populations and SMEs.
In an era of open APIs, we are also seeing a definite trend towards the ‘platformisation’ of banking services. This is enabling banks to connect their customers to new types of products and services. Personal finance management in particular is an emerging growth area, but given the rate of development, offerings in five years could be beyond current comprehension. Watch this space.
We also anticipate further diversification, particularly across digital identity. With only a quarter of the identification market related to financial services, banks are in a great position to extend their expertise across industries, including government, healthcare, retail and media.
At Mobey Forum, an ongoing priority is to chart this industry disruption. What are the areas that are being disrupted? What makes for successful disruption? What will the role of banks be in the future and how should they position themselves?
In doing so, we aim to empower banks to continue to thrive and shape the future of financial services.