What is fintech anyways?

Buckle up, you may become a fintech company by the end of this article!

In MKB Bank, we have started working on an open innovation lab and startup accelerator more than a year ago. As a result, we founded MKB Fintechlab and launched our first acceleration program with 6 fintech startups in March 2017. Over the last 8 months we have been working with those startups to help them in their product development, validation, getting their first customers and follow-on funding. Our startups have launched partnerships with MKB Bank, won several international awards and they continue to grow and develop. Futhermore, we have been building our regional network and launched our next international acceleration program’s recruitment process. But what fintech is exactly still remains a mystery for most…

In this memo masquerading as a blog post I will introduce our understanding and thinking on fintech and its relevance to the world through 4 statements.

1. The way we handle our finances will change whether we call it fintech or not.

Whether digitalization has an effect on the cost and revenue structure, workflows and experiences of the financial sector is not a question. The digitalization of society, user experience expectations thanks to GAFA (Google, Apple, Facebook, Amazon) and alike and the opportunities presented by digital technologies — they all forecast the transformation of the entire financial world. How the future of finances will look is still an open question but there are principles that you can expect:

• less physical, more digital: more and more people will use digital channels and less and less people will visit branches and physical outlets for everyday finances
• banking outside a bank: with regulations (PSD2) and technology giants growing bigger and bigger, more and more people will use non-bank surfaces to do everyday banking (account information, transactional banking, savings etc.)
• need for personalised services: customers don’t have the time nor the knowledge to browse through financial products, they want personalised offerings and the technology is there for banks to use to provide them.

2. Current workflows and systems will not be able to fuel the future of finances.

If you have been an employee or partner of a traditional financial institution, you should understand what I am talking about — these institutions are not built for this vision. Banks and financial service providers have to transform themselves from the inside out and vice versa in every aspect of serving their customers — including their sales and customer service processes, lending or even trading activities. It’s not a question whether this transformation will be driven by the implementation and application of modern technologies.

3. Customers will never have to know what fintech is.

Average customers are not into using a certain technology or an application — and they are not loyal to a service provider. They have wishers and goals which they want to achieve as fast, cheap and comfortable as they can. Who provides the journey to reaching their goals matters because of trust issues that comes with money, but who builds and provides the processes behind does not. The customer wants to show off her brand-new iphone X to her colleagues and she wants it as quickly as possible. When the financial institution provides a quick loan at the webshop checkout, the customers won’t know or care about:

• how the bank got her data to personalise the offering
• how and with which technology’s and partner’s (if there is any) help the bank processed her data
• how the bank could lend her money so fast (or why it took even 10 minutes)
• how the bank could identify the customer and do the relevant KYC and AML (say what?!) checks
• how the bank’s chatbot knew the answers when she was curious when she’ll eventually get her phone

4. Traditional banks are big corporates with thousands of employees in need of new processes.

Most bank’s internal operations and processes don’t allow for such experience on the customer’s side. A lot of manualities, internal organizational silos and expensive, inefficient processes — the burdens of every legacy corporates. This is not news for them, most of the banks have been actively looking for partners to help them prepare for the future.

Ok-ok-ok, but what is fintech then?

For us, fintech equals using technology in the financial world in order to create value for its stakeholders. As google put it nicely: “computer programs and other technology used to support or enable banking and financial services.”

At Fintechlab, we are looking for every startup that fits the bill — all startups that use technology to enable the financial world to create the user experiences the customers deserve.

It means that you may have woken up as a CRM, an advertising company or a security startup this morning and you go to bed as fintech today. See? This is how fast we can transform you:)