The Chairman of Nordic Finance Innovation, Chris Skinner, spoke at a our first member meeting in Oslo February 1 about his views on the current state of play of open banking and mobile payments, and the cultural factors that are driving innovation in different parts of the world.
Thanks to Chris and our great International and Nordic speakers for sharing terrific insightes with us.
The new platform model
“Europe and America have both seen the rise of digital technology companies that now dominate the stock markets, because they provide a new way of doing business that is far more efficient than the old industrial model”, says Skinner.
Platform companies such as AirBnB and Uber need a lot less people than companies from the industrial era that did all the heavy lifting themselves, and nowhere is this more apparent than when you look at the number of people required.
Skinner compares BMW’s 116,000 employees with Uber’s 7,000, even though Uber’s market capitalisation is higher. A similar comparison can be drawn between Marriot (200,000) and AirBnB (5,000), the latter with a higher market value.
Skinner believes that Open Banking is about far more than APIs, because the entire business model of a bank is changing:
“Nearly every global financial institute I deal with has tried to do the back office, middle office and front office. What ends up happening is they do some of it well, and some of it badly. With platform companies, products are still in the back office but platforms are in the middle office and user experiences are in the front office. It becomes frictionless and easy.”
A change in education
In the back office, the conversation is shifting from cloud computing and big data to deep learning, artificial intelligence and blockchain. As machines get ever better at processing data and learning, Skinner points out that we need to consider our children’s future:
“I actually have an optimistic view of the future. Most people think jobs going is bad. But there will be other jobs, we just don’t know what they are yet. We need to teach our children to have self-actualisation. They have dreams, empathy and human emotions, and that’s what we need to nurture, not teach them what machines can learn faster.”
However, the need for education goes well beyond the classroom. Only 6% of bank board directors have any tech experience, and thus have no idea what the difference is between deep learning and machine learning, for example.
“The problem is legacy everything”, says Skinner. “Europe and America live in a legacy economy. We did most of our infrastructure investments before Mark Zuckerberg was born, and we’ve tried to put sticky plasters over that legacy infrastructure to try and keep up.”
Skinner points out that companies such as WeChat and AliPay completely refresh their infrastructure every couple of years, and while they are on their fifth system, European and American banks are still operating on original infrastructure from the 1970s.
“What we’re doing with open banking now is inventing faster horses. We don’t have the vision to make a car”, says Skinner.
“On Apple Pay we have to see an image of a debit card to realise we are using our card. China never had those cards, so they’ve just jumped into this integrated financial, social, commercial operation with companies like WeChat and AliPay. China and Africa is where the real model of innovation is coming from.”
“Today we have seven and a half billion people on Earth who are included through the network, whereas two out of three were previously excluded in the branch distribution structure. It’s incredible vision, and it’s global”.
Chris writes one of the leading blogs on digital finance at thefinanser.com and is the author of several books on the subject. His latest, Digital Human, looks at how technology is changing the way we talk, trade and transact.
Activities in 2018
In 2018, we will continue our ambitious goal to be the arena for building a strong collaboration and co-creation culture across industries and borders in the Nordics. This will help our members to achieve new results and unique business values, faster, smarter, more agile and cost efficient than each of them can do on their own.
We are entering the new year with a Fintech cooperation agreement with Alibaba`s Nordic partner ePassi from Finland. In November 2017 ePassi launched a joint Innovation Center together with Alibaba in Helsinki. NFI will from January 2018 become a part of this cooperation.
We are planning two events in Asia in 2018 and one Nordic Innovation lab event together with IBM and Evry in the end of April.
Next meeting will be announced February 19.
We look forward seeing you at our NFI meetings, Round Tables and international events in 2018.
Iren Tranvåg CEO Nordic Finance Innovation firstname.lastname@example.org