Change has become such an important topic in financial services that there are now entire conferences dedicated to exploring how banks and other providers can meet the many modernisation challenges facing them.
One such gathering is the annual Banking Transformation Summit, which took place in London in June and attracted hundreds of expert speakers and thousands of delegates from long-established financial institutions and young fintechs alike.
Described as “Europe’s leading event for banks and tech professionals to learn, connect and shape the future of banking”, the event’s diverse mix of contributors covered everything from the growing AI opportunity to collaboration between traditional and modern banking businesses.
Panel sessions tackling everything from AI to fintech collaboration
In one of the summit’s first sessions, speaker Megan Caywood Cooper, of Stealth Startup, described how AI tools would soon enable wealth managers to reduce analysis and report writing time from 20 hours to just 15 minutes. This promises a tantalising transformation in providing “wealth management for the masses,” said Cooper before unveiling the name of her new venture, "Caywood".
However, she warned that there were a number of yet-to-be-addressed concerns, particularly around liability and the need to ensure AI guidance is properly calibrated.
Elsewhere at the event, a discussion on the “fintech ecosystem opportunity” tackled the age-old question of whether the future of banking would be dominated by legacy businesses or new entrants.
During this discussion, panellists Charlotte Bullock, of London Bank, Gillian Benge, of Breaking Wave, Lloyds Banking Group’s Nadir Abrar and Andreea Iosub talked about how the current hybrid model of banks and fintechs working together was set to continue.
Are banks and fintechs becoming more culturally aligned?
The panel also offered advice to both corporate and startup businesses. For large banks, it’s vital to note that innovation requires investment - it doesn’t happen for free. And for fintechs looking to work with the sector, there’s a need to break out of the innovation lab and expand into other departments within large financial institutions.
Building on this theme, Andreea said fintechs should target three areas in their efforts to align with banks, namely innovation, risk and strategy.
The summit didn’t have to wait long for evidence that fintechs are rising to these challenges. A session titled “BaaS is dead, long live BaaS” by Neil Chandler, of Aion Bank, looked at how early Banking-as-a-Software platforms were too tech focused and didn’t fully address customer and regulatory issues.
Things were changing, he said, thanks to next generation ‘Banking-as-a-Software 2.0’ platforms, which are helping to extend regulated financial services to new sectors like retail.
Yet barriers to innovation remain. At a roundtable on “unleashing the power of fintech beyond traditional banking”, chair Ronelle Arbib, chief operating officer at Recognise Bank, described how a focus on regulation could sometimes result in innovation avoidance.
Why accurate financial modelling is essential to banking transformation
While it was clear from the various panel sessions that reconciling fintech and bank cultures is still one of the biggest challenges to banking transformation, there are other obstacles that need to be overcome.
For instance, it’s also important to take into consideration the impact of innovation projects on banks’ working capital and investment programmes.
This isn’t just about how much a large financial institution should be spending on developing technology, whether in-house or in partnership with fintechs. It’s about understanding the spend associated with operating an expanding tech stack, additional compliance considerations arising out of new tech adoption, changing customer behaviours and more.
Getting these projections right is no mean feat but there are methods and tools that financial institutions can deploy to paint a detailed picture of the short, medium and long-term costs and benefits of transformation, enabling banks to navigate a changing world with confidence.
And a session on this topic would surely be an unmissable event at next year’s summit.
Sources: