In the first part of my reflections from the FuW forum: Advance Finance Together in Switzerland: AFTS, I focused on perspectives originating from the financial sectors (e.g. Credit Suisse, BLKB) and from other stakeholders like incubators and the regulator.
Today I want to take a less traditional periscope that will provide another perspective of the transformation underway. Always remember that Switzerland has its own culture and is advancing in its own way. The culture from the unique consensus democracy cannot help but spill over everywhere. As we speak, it has been decided that five of the largest Swiss banks (Credit Suisse, UBS, Post Finance, Raiffeisen, ZKB), Coop, Migros, Swisscom, and last but not least SIX, will sit at a table over the next two months to discuss the possibility of a unified Swiss digital wallet platform. Essentially, positioning Paymit and Twint as a Swiss unified platform (against Apple Pay’s intrusion).
Migros, Coop are great Swiss examples of companies that have a large captive customer base. They have been traditionally categorized as retailers, or conglomerates. Migros lists in its annual report six main strategic businesses and one is financial services.
Their footing in what we think of as Fintech, seems only via Twint (a Swiss digital wallet fintech) and Paymit (digital wallet supported Six, SIX, the leading Swiss banks and the largest partner network), but this is the wrong way to look at the market.
We have been used to looking at Fintech startups, Financial services providers, and IT firms. The distinctions are getting blurred as we speak. Joerg Schoenharl, from Horvath & Partner, alerted the FuW audience to a Waldo visual and echoed loudly “Where is the client?”
Where does the client spend more time on? Where do I spend my online time one? On which App? Are you dear Fintech, chere Bank, herr Insurance company, linked to the API of all those apps, that I spend most of my time on?
Platform strategies are the way to go, to make sure that the customer stays longer on your platform. Platforms are built via APIs. It looks and feels like a puzzle. Insert pieces that lock into your existing pieces and create your own quilt, your own platform.
Thomas Dapp, from DB research, an independent think tank of DB, spoke about the importance of enabling P2P mechanisms and the networking effects of such platforms. He inquired about allowing customers to offer and to view P2P investment recommendations, much like Amazon book recommendations but with an optionality.
Sandra Emme, from Google Switzerland (in charge of financial services and luxury goods) scrapped the conventional way of looking at digitzation maturity, needs, and metrics. We typically, inquire about a bank’s Fintech or Blockchain involvement; funding, or proof of concept, or partnership. We also look at corporate innovation within the bank or the insurance company; in house projects that replace old processes with more automation. But Sandra says, we are missing the point by focusing our attention, energy and resources in this way; simply because the market moves and is more unpredictable than ever. So the focus should on Corporate Agility first. Essentially, when you are dealing with moving targets, or mutating situations, like we are, you need to train yourself to adapt. Culture is essential and not outfits, lingo, and window dressing. Innovation labs, accelerators, jeans, and lava lamps are not a strategy, unless there is a true vision behind it.
Customer centricity is essential because it focuses you on delivering in an automated way the relevant info and tools and doing this in a personalized fashion.
We already live in a world that is NETWORK CENTRIC. Business models launched on platforms that enable P2P mechanisms; corporates that have customer centric visions instead of product centric and margin dependent.
It all made me think of some 40yr old who is not served by a private bank today, because “Sorry, I cant serve you if your account balance is below $1million”. What probability is there that he or she will go back when they are 60 with the $1.5million to that provider?
The boat was actually, rocked at the FuW forum right at the start, when Andreas Antonopoulos, the Bitcoin expert and author, echoed loud and clear that
Banks can become brave and transform into banking apps that offer among other things, privacy and security
His show was provocative and very thought provoking since it challenges what we know: the central surveillance system, a money system that depends on flags and geopolitics, etc
I walked away towards the Doblebahn and felt that the “Migros” and “Google” platforms are more relevant than most realize. Empowerment of the customer and decentralization, are realities and not optionalities. Risks of course, are increasing because the new realities are not well understood and they need time to develop, much like the internet itself.
Financial services in some ways is no different than any other services, like health or education. However, the centralized, national and geopolitical structural features of money, have had immense ramifications in the way financial services are delivered.
Platforms, APIs, customer centric corporate business practices; are circumventing lots of the limitations of the previous era. All this is to the benefit of the customer and to the “detriment” of the provider. Financial services will be provided by financial institutions or Fintechs or IT giants, or other networks like “Migros” who are well positioned already by serving many of our everyday needs.
AFTS clarified for me that
market and structural silos that have been protecting financial service providers, are melting. The space is mutating.
Train yourself to look for networks and platforms instead of banks and IT firms.