EXCLUSIVE: The Big Stories From City Week 2022

Day 3 of City Week 2022 was filled with discussion about “The Fintech Revolution”, and how technology and disruptive innovation are key drivers for growth in our industry. From crypto to digital banks, cross border payments to stablecoins, I could talk about every speech that was given, but here are my two top talks of the day that you should tune in for!

My quote of the day comes from Tony McLaughlin, Managing Director, Emerging Payments and Business Development, Treasury and Trade Solutions, Citi.:

“The capitalist system is built upon creative disruption.” We should not fear disruption, we should embrace it!

Assessing The Progress of Digital Transformation in Financial Services and Looking Ahead

Matt Hammerstein, CEO, Barclays UK, began the talk by outlining how “the game is changing faster than ever.” Whilst automation and digitisation have been key trends in the fintech scene for the last decade, the next phase of the journey will be about augmentation; “taking the prototypical branch manager from the past to the future by taking advantage of data and solutions in real time.” A key challenge here though is ensuring digital trust and digital literacy amongst customers. How do we do that?

Ultimately, this requires us to answer two fundamental questions, stated Stephen Bird, CEO of abrdn. says How can our clients deal with us, fastly and conveniently? How can technology help them achieve their goals? “The way to invest in technology depends on which client group YOU’RE serving”, and so using AI applications and data analytics to provide specific services of genuine value customers is the way to maintain, build and further consumer trust.

This is no easy feat though – what are the risks? Dame Anne Richards DBE, Chief Executive Officer, Fidelity International, perfectly summed up the biggest risk, following the status quo. “Doing nothing feels safe. It’s really not. You need to create a culture where people are comfortable and open to change. To do that you need really good training and upskilling so people see that in change there are opportunities.” In an increasingly digitised word where more and more people become technology savvy, it makes sense to be prepared to adapt. Stephen Bird wisely noted that “it’s all about having a client strategy. Don’t worry about going from mainframe to cloud, but make sure a business strategy is moving at the speed of the marketplace for the clients.” It’s easy to forget who we are improving the market for. Ultimately, it’s for the people.

Marián Bonk, CSO, Platon Life, approached the discussion from the crypto world, offering a fresh insight into the use cases of NFTs. Bonk claimed that NFTs could be a great tool in the future, but only if they tokenize and digitise value for everyday people instead of existing just for the sake of it. Naturally, the conversation went onto the big buzzword and potential trillion dollar industry, the metaverse.. “The metaverse is an accelerated form of globalisation, a digital version of the process… it’s revolutionary.” In many ways, this is a great way to look at something that so many are critical of; deconstructing physical and geographic barriers in an optimised dihised environment surely offers exciting potential? “Once you can safely tonken property and assets in the metaverse, which could take 1-3 years at the latest, then the metaverse will be truly revolutionary.”

International Expansion and SaaS – Anne Boden MBE, CEO, Starling Bank

Starling’s latest funding saw the company raise £130.5 million and doubled its valuation to £2.5 billion. One word – wow! ”We are proud to be both high growth and profitable”, said Anne Boden. The big thing Starling has in their sights at the moment is to take advantage of their technology lead, viewing themselves as not just a bank, but “a global technology company that owns a bank in the UK.”

Given Starling’s prolific success it seemed natural to ask; can traditional financial players catch up with challenger banks? “I reject the term challenger banks because it implies they’re second tier, forever. We’re not second tier. We have half the market share of Barclays in the SME sector in 3 years compared to the 300 years Barclays had.” Why? It’s all in the culture; focusing on what truly makes a difference to customers is why Starling is sailing away, and why traditional banks are getting left behind.

KYC, fraud and AML concerns seem to have the industry gripped at the moment, especially after the FCA’s latest report. Boden prided Starling’s ability in keeping safe and fighting fraud in the UK. In January, Starling decided to not promote on Meta, or Facebook, because, as Boden puts it, “they aren’t doing their fair share to protect customers in their ecosystem from fraud.” What this does show is Starling’s fearlessness to do what’s best for their customers, regardless of the talk it may generate. And it doesn’t stop there.

Cryptocurrency is excluded from Starling’s eligibility criteria for BaaS. Boden is in no doubt that crypto will exist as an important component in the future of our ecosystem, but at the moment, too many exchanges are hosting fraudulent crypto coins. Interestingly, Binance CEO, Changpeng Zhao, noted that according to Chainanalysis, 0.15% crypto transactions were associated with illicit activity.” However, Boden believes that until the industry puts more controls in the space, we all have to be wary. This would make sense since the crypto community itself is welcoming of regulatory compliance. “The majority of people buying crypto at the moment are buying it for speculation. We need to make sure people don’t get scammed because of this and because of Starling.”

What does the future hold? An IPO is very much on the cards, but after establishing themselves as a leader in the UK, Boden noted the intention for Starling to start operating in the US before looking towards Australia. Global expansion for the company is extremely exciting and inspirational for the new wave of banks and FIs to see!