As the big established players outsource to nimble specialist fintechs, it is the coming together of two worlds. Indeed, a substantial proportion of our audience will work within a fintech environment. Their way of working would appear to encourage swifter decision making; greater innovation; and be appealing to the well-educated with ambition. Well that is the impression… We are intrigued and will invite a fintech to demystify.
- As the big established players outsource to nimble specialist fintechs, it is the coming together of two worlds. Indeed, a substantial proportion of our audience will work within a fintech environment.
- Their way of working would appear to encourage swifter decision making; greater innovation; and be appealing to the well-educated with ambition. Well that is the impression… We are intrigued and will invite a fintech to demystify.
Headlines
There are 3 factors that define FinTechs:
- Culture / the way of working
- Attitude to risk
- Attitude to markets and products
It is very hard to change large firms so they must engage and take it a step at a time. Resistance is not the answer, and neither is radical engagement.
The common Fintech terms in use such as scrum and tiger teams are nothing to be feared. They just represent a way of working. They are not complex to grasp; just a different structure and process. What is more important than the term is the culture and mindset that sits behind them.
Partnerships between established financial services firms and Fintechs is one path to pursue. Again, however, these should be based first on smaller steps. To deliver on these commitments requires clarity, education, small steps to start and leadership responsibility and support.
Culture/way of working
Fintechs are about challenging the status quo. Within Fintechs, there is no existing business or infrastructure, there is no product to disrupt, there is no legacy staff base, culture or mindset. They are free to pursue opportunities without those ties. They are also about breaking away from hierarchy and being the ‘experts’. They do not like rigid, top-down management structures as these slow developments down. They cannot afford to work on long-term projects, on the waterfall development methodology, because they do not have the funds. They have to work faster and be organised in a different way such as with flat structures to recognise that no one has a monopoly on good ideas.
Ultimately, whatever the culture, the terms used to describe the process or who has the ideas, what matters is the output.
Attitude to risk
Fintechs have a higher attitude to risk. In many ways, of course, they are able to. But the culture is also one that embraces risk and a willingness to fail. The culture must accept that. Often, Fintechs get criticised because they launch a product and then later pull it. A recent example of that came from Monzo. The traditional market doesn’t understand this approach, but it is all about testing and a willingness to take risk, to fail (while learning) and to improve.
Attitude to markets and products
Fintechs look at problems that customers need solving. That is their sole focus. They think only about the customer and they create communities and processes to understand the needs of the customer. Rather than being product focused, they are customer focused and that informs what the product should be and how it should be developed and adapted. Product development is, therefore, based on the needs of the customer, not the needs of the business selling the product.
Established financial services firms
Conversely, the established financial services firms are seen to be too rigid, too top-down, too focused on internal rather than client needs, too big to change, too focused on risk, unwilling to learn and fail as they go, and so on. They are, however, making steps to engage with the new Fintech terms and methodologies but it is fragmented across their large businesses and by no means a universal experience. In most instances, they are seen to be far from engaged in the Fintech lexicon and mindset.
Conclusions
The gap between the Fintechs and established firms is wide, but it is not about terminology. Culturally, they are very different. The means to close that gap is through engagement, partnership and taking small steps to align cultures, processes and beneficial outcomes.
Expert: Phil Zeidler – Dead Happy
Facilitator: Stephen Wall – The Wealth Mosaic
