FSF Business Banking Revolution

Last week we took part in our third joint event this year with the Financial Services Forum Fintech group. We discussed the impact that fintechs and challenger banks are making in the business banking sector, and, the move away from the old sales and product obsessed mindset to one of genuine customer centricity.

Held at Janus Henderson, many thanks to the panellists for their insights

• Caroline Plumb, CEO & Founder of Fluidly, a venture backed business which uses machine learning to help small businesses manage their biggest pain point – cashflow

• David Jenkins, Business Development Director, Aldermore the specialist lender and bank for SMEs, targeting the ‘go getters’

• Lorence Nye, Policy Advisor, Federation of Small Businesses

• Moderated by our Group Business Development and Marketing Director, Fiona Couper

The discussion included some of the reasons behind the failure of both fintechs and challenger banks to have as yet truly disrupted the competitive landscape which is still dominated by the main five. Prime evidence of this is CYBG’s recent purchase for £1.7bn of Virgin Money which was hyped to create the first true challenger which was still smaller than Lloyds purchase of MBNAs UK Operations for £1.9bn to fill a portfolio gap).

As with retail banking the business banking landscape is evolving, and a new ecosystem is emerging. Symbiotic relationships have become more common between the newer fintech players & challenger banks and the old guard.

The panel shared their views on the medium-term impact of fintechs and Open Banking where it was suggested that those providing AI and big data which provides predictive insight will be making major changes to the sector. Though Open Banking is still in its infancy and with major challenges ahead, it is likely that many of the traditional incumbent banks will become the infrastructure layer on top of which sit those able to provide business services such as accounting, invoicing and greater integration and on demand control with more traditional banking services such as payments.

Transparency remains critical although the caveat was raised that as big data and deep learning becomes more prevalent, the complexity of the algorithms means that sometimes the answer will be because ‘the computer says no’, and full transparency may not be possible.

Yet at the heart of this change remains the very real needs of the time pressed entrepreneurs and business owners. The Federation of Small Business highlighted the difference between the London centric tech developments and the regional discrepancy where most of their members still highlight their desire to be able to speak with someone.

This neatly links back to Teamspirit’s event with TPAS on 11th September where we called for the fs industry to Design for People. Understanding and responding to the very real needs of customers must be central to all innovation which we believe can be best achieved through creative collaboration. This is exactly what the fintech sector continues to spearhead and makes it such an exciting catalyst for change across all fs sectors.