FinTec 2016 – quo vadis? – Part I: The digital challenge

Before diving into the discussion what “digital” could mean to the banking business let us first spend some minutes, WHY we should deal with it. My theory: “Digital” helps to create relevant banking.

Now, what means “relevant” in the context of banking to me? Let me try to explain my view: Talking about retail and SME customers, relevant banking is banking that helps the customers regardless of time and place in the appropriate form. Relevant banking is not limited to life-cycle management in 10-year-waves but in 10-minute-increments. Relevant banking helps with small problems to “small solutions”. Relevant banking helps to have more money.

We now can discuss whether we can achieve this goal in a branch. The answer – to me – is easy: no, no way. To achieve the goal of becoming a relevant partner to the customers, we e. g. need to interact digitally 24 hours a day, 7 days a week on a realtime database. None of the modern services like peer-to-peer-lending, crowd finance, communities, product-ratings, personal finance management and any other upcoming service can be seriously executed in a branch.

Let us even go one step further. It’s not just the digital communication- and interaction-channel. It is the infrastructure behind the customer front-end that enables relevant banking in the digital age. Means: Setting up a modern day digital financial services experience with the objective of becoming a relevant partner to the customer cannot be reduced to a nice looking app on top of a 3 decades old corebanking-system. A sustainable digital concept must be more than only “lipstick on the pig”. (By the way: that phrase to me is “the phrase of the year 2015”).

Creating “relevant, digital modern day banking” needs an appropriate infrastructure (because of its digital nature) that must meet the following criteria (shortlist):

  • It must be an open and accessible to all market stakeholders. This is why APIs are a basic precondition to any future development. Those APIs should be easy to understand, man- and machine-readable.
  • The modern day banking infrastructure offers modules that support the bank (or non-bank) creating a suitable offer according to its strategy.
  • To the customer this is an account that looks more like a marketplace: increasing choice, variety and options for both the bank (or non-bank) and the customer instead of reducing those for both parties.
  • As you can read out of that, speed is the super-crucial topic to any digital development. The modern day banking infrastructure can deal with the customers realtime demand in the same time it understands the “traditional behaviour” of a legacy corebanking system.
  • Of course, a modern digital infrastructure is agnostic on both sides: to the corebanking-side as well as the to the customer/user experience layer. Via APIs it can be connected to any kind of “front end”, presentation layer or end device. Within an increasingly growing IoT (Internet of things), this it is a crucial criteria
  • The digital modern day banking infrastructure allows realtime identity management. Via its profile-module it can aggregate a banking profile, a community profile and third party community profiles. This data is stored safely and audited by banking regulators.
  • A customer acquiring a third-party-offer within that open account-marketplace must be ensured a safe transfer of identity. Same thing for the b-t-b partner who is offering services within that account. That partner might have the need to ensure KYC status etc. which then will be provided and shared by the infrastructure – as said in realtime. Means: Such a digital infrastructure is creating trust and security to all its partners and users.
  • Real-time communication and interaction takes customers for example held in the integrated community-module. This offers peer-to-peer communication as well as bank-to-user/customer interaction.
  • Speaking about data: The digital modern day banking infrastructure is the central “data lake” handling date as fast as possible. Just a minor example: A client has the need for microfinance at midnight. Pressing the button (in the app or desktop, doesn’t matter) the customer receives a few seconds later a positive feedback based on a real-time scoring. Same time, the money is already sent because a digital modern day banking infrastructe offers realtime closed loop payments. In the same account for more or less zero cost.
  • Data and analytics is relevant also to customers. It must be used to the maximum benefit of the customers, simply because it is the customers date. By that I mean that a customer should have the chance to receive whatever kind of analytics irrespective to assetclasses, spending behavior or type of transactions. Out of that data the account should become a “coach” supporting the customer in achieving his/her goals and objectives.
  • Digital means that even small-sized/micro financial services can be provided in a profitable way. Digital banking must have the ambition to work with the industries best KPIs – not only because it must be super scalable.
  • And, not to forget: The digital platform of the future must be compliant with the respectively local regulation. Best would be if its creators have a deep understanding of regulation.

Summarizing: Banking can become more flexible, instant, customer centric, customer-supporting and by that finally relevant to its user. The digital development can boost banking into the next level by becoming a relevant partner to a mass market – not only to a elite of customers services via wealth management or private banking.


  1. The branch Infrastructure of financial institutions will slowly but surely vanish.
    However, banks will have the chance to make use of existing technologies like blockchain and other ones.
    Key factor as you mentioned is building Trust into new technology and its providers.
    There is still a way to go in order to create relevant, day2day, normal, seamless financial infrastructures in the light of the digital transformation for both private als well as corporate customers. I am optimistic that with joint forces WE will be able to accelerate the process for the sake and benefit of everybody (except for banks).
    You started already long time ago and now with fidor and the Ripple Cooperation as well and with other frontrunners are a very good examples to make the financial World work more efficient.
    Go ahead this way !!
    Thanks and best regards,
    Rupert Jaeschke.

  2. Carlton Hopper says:

    I think 2016 is going to be a critical year for established players and new start ups alike. My personal prediction is this is the year that many financial services players will make decisions on platforms required to support their growth or indeed market share protection. Perhaps the question they should be asking is which the partners they wish to work with that can leverage platforms and lead the continued innovation in this market place?

    Innovation questions should start with Why do I exist and Who do I partner with to meet future needs of the market…too often people focus on What do I do and What platform do I need.

    2016 is going to be a key year that could make and break many industry players…true innovation, speed to market, alliance strategy and industrialisation are going to the levers to market success in my view.

    Looking forward to an exciting year!


  3. Very good summary where most banks are wrong. I see so many players in the industry to put lipstick on the pig (I am using that phrase a lot lately)! It alls about call the vendor, have a more sexy UI, do something more/different, go to FinTech Events and invest in some …

    … but it doesn’t change how banks work! My focus is also around data lake (serving a new bread of data driven applications), APIs, feature versus platform development (DevOps, Agile, Legacy abstraction), LEAN … So much to do, but not everyone understand that the true effort is rebuilding the IT Department and internal customers of IT. It must be an engineering department. Someone who takes ownership and understands. The top 15 people, not 1500 average players. I am very passionate about Bankers going away from conference and going back to fix banking.

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  6. Now I feel stupid. That’s cleared it up for me

  7. Nagyon guszta, igazán fincsi lehet! :) Nálunk (a családban) egyáltalán nincs hagyománya ennek az ünnepnek, bár idén már vettem egy aranyos kis tököt, a teraszon csücsül. Lassan nekilátok a faragásnak, bár lehet, hogy a karalábéval könnyebben boldogulnék! :)

  8. Erstmal HAPPY NEW YEAR (bin erst st. gestern wieder im Netz…) und dann gleich einen schönen Urlaub wünsch ich dir.Ski heil! Und kommt gesund wieder!!!LG, Katrin

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  10. ok, now I’m feeling dumb and uncultured because i’ve never heard of Banksy thanks for schooling me. This is brilliant! I love his guerilla marketing tactics and gutsy moves.

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  2. […] maybe in an inflationary way. I am afraid that the majority of those start-ups will be “lipstick on the pig” concepts. Real, true innovation will remain the minority. Not to talk about disruptive […]

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