In an era of major disruption to the banking industry, the traditional model has changed. On one hand, specialist apps snipe at the edges of the one-stop-shop service that main street banks aim to provide to meet all and any of their customers’ financial requirements. On the other hand, new ‘challenger’ and online-only banks aim to provide a range of services much more attuned to the needs and requirements of contemporary lifestyles and work patterns. In both areas, new market entrant disruptors are developing digital innovations faster than the existing banks can keep up with.
New disruptors are targeting the banks’ most profitable activities, while their more everyday and repetitive services will be increasingly automated. But automation of the existing range of services is not enough to ensure viability. The founder and CEO of digital payments startup Koine Finance, Phil Mochan, forecasts that digitization will claim 80% of current banks within 20 years. He points to three key change drivers:
- Customer dissatisfaction
- Loss of faith in the current incumbents
- The growth of alternatives
The banks that survive are likely be very different to what we have today. It is likely, sector insiders speculate, that they will move away from owning their own operational services and become agents instead. They will provide customers with a trusted entry point to the services they require that will be delivered by a variety of third party suppliers. A strong example is in the field of international money transfer. In such a future scenario the most valuable asset a bank will own is its branding and imagery.
Despite this prediction, “the way banks chase profit at the expense of customer care is pushing them the wrong way and in to decline, at least in terms of reputation,” said CMO Nigel Gilbert of traditional UK retail bank TSB at the recent Brand Finance Banking Forum 2018 event in London.
TSB have made their own recent headlines for all the wrong reasons. A weekend-long migration of its website to a new host, that the bank’s software engineers misguidedly toasted with champagne in an image posted (albeit temporarily) on Twitter, actually caused more than a week’s chaos with almost two million customers locked out of their personal accounts, or some found they had access to other people’s accounts. Businesses were unable to pay their staff and suppliers. Compensation will cost tens of millions of pounds, and interest rates for deposit account savers have been raised to 5% in an effort to stem the expected customer outflow. TSB has been described as “on its knees.”
Revolut’s CEO and co-founder Nikolay Storonsky: from a fintech startup to a $1.7bn business in three years
In the same week, the London-based global fintech startup Revolut, that provides their nearly two million customers with a debit card allowing the holder to spend money in 150 currencies with no fees, raised $250m which valued the business at $1.7bn (£1.2bn). Only two years ago it ran a crowdfunding campaign to raise £1m to get started. The latest cash injection will be used to expand in US, Canada and Australia, and increase the workforce from 350 to 800 by the end of 2018. Right now they have vacancies across Europe and in Hong Kong and Singapore.
Although unrelated and coincidental, the impression of traditional banking organizations being unable to grasp digital opportunities and being left behind is a strong and enduring one. At the same time, a new generation of fintech-based service providers have their own growing range and number of job vacancies.
Registered in the European Principality of Liechtenstein, InsurePal is a next generation peer-to-peer insurance provider based on social proof endorsements, fully harnessing the power of blockchain innovation. It will serve as a replacement for insurances as we know them and offer a completely new type of coverage for areas of life and business.
Through basing customer risk assessments via social proof rather than more traditional methods including how long anyone has kept the same address, InsurePal is positioning itself as a go-to insurance provider for mobile workers in the gig-economy. It also aims to operate with its own non-cash ICO currency of InsurePal (IPL) Tokens, eventually side-stepping cross-border cash exchange fees. They currently seek a Chief Product Officer based in London, after which other global appointments will surely follow.
WeSwap is a UK fintech startup that enables multiple currencies to be held on a single card debit card. Various currencies can be acquired through crowdsourcing what each cardholder requires from among other signed-up cardholders. Acting on a closed-user group ‘swap’ basis both the ‘buyer’ and the ‘seller’ use the WeSwap app to obtain more favorable exchange rates than from traditional means of retail currency exchanges. WeSwap has just smashed a £1m crowdfunding target and raised £2.4m. It is staffing up in its London office with vacancies including an Android Developer, Sales Executive, Product Developer and an in-house Customer Service Advisor.
Continuing the theme of making cross-border payments simpler and cheaper, Stripe is a US-founded payment method favored by many crowdfunding platforms, among many other business sectors. Stripe also supports app developers from a number of countries, card payments in 135 different currencies, ACH, and have a continually-improving checkout form. They’ve partnered with Apple to power Apple Pay, and helped launch a new cryptocurrency, Stellar. Again, it all makes life easier for people and businesses operating in more than one country or currency in the crowdsourcing gig-economy. Though headquartered in San Francisco they have many current vacancies in Europe, Asia, and north and south America across a range of disciplines from Business Operations and Communications to Sales and Tech.
TransferWise founders Taavet Hinrikus and Kristo Käärmann
Yet another service provider providing an international payments facility is TransferWise. This fintech business was founded by a pair of Estonians, who describe themselves as “financial revolutionaries.” It enables international cross-border payments at non-inflated exchange rates, a mid-point of the officially quoted buying and selling rates provided by Reuters. TransferWise does this by paying money in to and out from their own bank accounts in 59 countries covering 104 currency routes. No money actually crosses any international borders, hence lower fees can be charged to users. The company is currently recruiting “fellow revolutionaries” to join them in roles that continue to build the product, encourage customer adoption, run the actual service operations, and provide internal support to other team members.
Far less to do with international payments though servicing a frequent pinch point, Venmo is a mobile payment service with a digital wallet that lets users make and share payments with friends to easily split a bill, cab fare, or much more. It allows users to transfer money to one another using a mobile phone app or web interface. It is owned by PayPal and handled $12 billion in transactions in the first quarter of 2018 alone. They currently have over a dozen vacancies based in New York covering Analytics, Engineering, Design, Customer Support and HR.
These and many other fintech startup disruptors, often utlizing blockchain technology and sometimes ICOs rather than relying on fiat currencies, are contributing to the steady decentralization of financial services and creating new work opportunities. Decentralization is a major theme of our global CSW conference that we are staging in Washington D.C. through October 24-28 with a gala opening, two days of conference sessions plus two days of weekend expeditions. An early list of international speakers is available, along with ticket registration. We hope to see you there.
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