BBVA API Market
Despite regulatory uncertainty, the slow trickle of financial APIs, and the fierce battle for investors, if anything became clear at Fintech University organized by BBVA in its Innovation Center, it is that ecosystem of technological and financial companies squanders energy, hunger and talent. All driven by a new collaborative and open work philosophy, hitherto unknown in the world of traditional financial services.
Chris Skinner, one of the people who best know the ins and outs and the health of financial technology in the world, was the master of ceremonies and moderator of many of the panels of the Fintech U conference in Madrid. Communicator, networker and advisor, from his privileged view maintains that humanity is experiencing a fourth revolution, a drastic change with no way back that thanks to hyperconnectivity is transforming the way of doing banking, making payments and transactions.
“Apps, APIs, artificial intelligence, blockchain, cloud, big data, etc. all these technologies are opening the flood gates to integrated structures of traditional financial services,” Skinner informed. Before this he emphasized that banks are not able to assimilate this revolution, of opening up to open and collaborative technology, “and still think they can continue to develop on their old infrastructure… are going to fail”.
For most banks this change in mentality entails “a genuine cultural nightmare”, accustomed to working with own internal systems that control from the front office to the back office. The key, according to Skinner, is not to view fintechs as a threat but as an enriching travel companion that is doing “a fantastic job; they will not replace the banking sector, but add a new layer to the system.”
Fintech will not replace the banking sector, but add a new layer to the system
The huge noise and expectations around fintechs is justified in his opinion in their transforming and democratizing role, as they are “attacking a lot of areas that traditional banks do not cover particularly well or have completely ignored, such as SMEs or high-risk or unbanked customers, because it was very expensive to serve them.”
Examples include many of the projects presented at the Fintech U, such as Dwolla, Transferwise, Bankast and Number26, which in many cases make it possible to invest, borrow money, make transfers or pay anyone instantly anywhere in the world, regardless of their banking history.
According to Skinner, one of the major issues still to be resolved is “trust”. The banking system is fundamentally based on that, on the trust and security that supports it and guarantees our financial transactions, and today “the only place where you can put your money with the guarantee that you will not completely lose it is in the banking system.”
That level of trust, according to Skinner, “is still very difficult to achieve on the internet”. Partly because there is still no international regulation that defines with which licenses and structures fintechs should operate.
Governments and regulators working in the US and Europe, with diametrically opposed approaches, search formulas to clarify how fintechs should work and be integrated in the banking sector to provide security and guarantees to the sector (and the end user).
For Skinner, “the question really is: What should the regulator’s role be: to stimulate growth or control risk? I think it should do both,” he added.
Further information about Fintech U:
Various case studies are used to show how open finance enables the financial inclusion of SMEs and the economic growth of developing regions.