There are over 400 Fintech companies in Germany, and Berlin still reigns as startup capital with 2.1 billion Euro invested last year alone. Yet outside of this bubble the world looks very different: only 32% of people worldwide having even heard of a Fintech business. So what is the current mood in the scene, both for established players and newcomers?
I attended the WIRED Money 2016 conference, powered by Deutsche Bank, to explore just that. The event, hosted by Gründerszene and WIRED in Berlin, aimed to uncover the latest trends, introduce digital products, and bring together key stakeholders in the finance sector. Here my top 5 takeaways.
1) A little confrontation never hurt anybody
“It’s cute,” was Skype-investor Morten Lund’s response to Markus Pertlwieser announcing Deutsche Bank would be investing 750 million Euros in digital innovation. Lund is against the measured innovation journeys of established players like the Deutsche Bank. His motto: execute now and fast.
Friction between old and new players was apparent at various points throughout the day. During the local insurance brokerages panel, Dennis Just, founder of digital insurance start-up Knip, was dubbed “a socialist” by Sebastian Grabmaier (JDC Group) and Sebastian Sieglerschmidt (Allianz Accelerator) for extending a level of trust towards customers when it comes to claims.
Fabian Bräunlein (Security Research Labs) made his point in an unconventional way: through a live demonstration of a payment terminal hack, Bräunlein exposed the currently huge security gaps and urged companies to become more conscious of their responsibility to customers.
Fabian Bräunlein from Security Research Labs does a live #hack of payment terminal at #WIREDMoney pic.twitter.com/MQTyAcULvQ— jovoto (@jovoto) April 28, 2016
2) Collaboration the key to the future
It was not all confrontation though – there was also an emphasis on established and new players working together to achieve the best outcome for all.
Markus Pertlwieser, Deutsche Bank COO, recognized that innovation cycles are becoming faster and faster, making it harder for established players to keep up – which is why Deutsche Bank is building on the collaboration with more agile startups to find digital complements to their advisory branches. Pertlwieser presented their different collaborators, among them jovoto with the future of banking think tank and the first crowdstorm on artificially-enhanced banking.
Brigitte Zypries, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy ended the day with what Markus Pertlwieser started it with: Even when challenging, collaboration between startups and established players is the key to the future.
Markus Pertlwieser, @DeutscheBankAG, on stage @ #WIREDMoney on crowdstorming with jovoto on the #futureofbanking. pic.twitter.com/fJfLmhg522— jovoto (@jovoto) April 28, 2016
3) Buzzword of the day: Blockchain
Blockchain was the buzzword of the event – even long before Blockchain Co-founder and CEO Peter Smith took the stage. Though Blockchain the company is not to be confused with blockchain the technology, Smith was one of the few people that could answer the question posed various times during the day: What is blockchain? Smith sees digital currency, such as Bitcoins, as the future of finance and the blockchain as building a completely new banking foundation, as opposed to initiatives that simply improve a broken product, which the current banking foundation is. While many agreed it is the technology of the future, when outright asked who understood blockchain, few raised their hand. To help get you up-to-speed, here is a quick video explaining blockchain:
4) Finance is becoming more personal – for better or worse
While showcasing all the new ways tech is revolutionizing finance, a couple of speakers highlighted the fact that at the heart of all their efforts is serving people better. Kaidi Ruusalepp (Funderbeam) for one thinks crowdfunding makes funding emotional, investors want to be part of something they believe in.
In retail, Jörn Leogrande (Wirecard), highlights that analog is going digital and vice versa to improve customer experience: Formerly pure ecommerce retailers are feeding into nostalgia and opening brick and mortar stores (Amazon store in San Francisco, Warby Parker store in New York). On the flip side, Kate Spade launched 24-Hour window shops, integrating digital to analog shopping:
Google has gone one step further in their Google Hands Free advertisement, purposefully making something as impersonal as paying emotional:
Though personalized Fintech doesn’t benefit everyone: While it wasn’t pegged as the most important factor, Toby Triebel (Spotcap) and Clemens Paschke (Lendico) admitted social media data impacted loan decisions – repeated visits to casinos for example would be grounds for rejecting an application.
5) Social finance – paradox or reality?
Let’s be honest – when thinking of social enterprises, the financial sector is one of the last things that comes to mind. That notion is exactly what a new crop of Fintech companies is looking to tackle. There is no question that the need for banking services is acute, and the developing world is keen to get access. As Raffaele Mauro (Endeavor) highlights, while only 2% of adults worldwide have mobile banking accounts, 12% in Sub Saharan Africa do as their access to bank branches is limited.
A host of social Fintech enterprises were present at the event. Morten Lund presented his CodersTrust initiative in Bangladesh, a micro-finance institution that provides loans to students and freelancers to take programming courses in return charges commission from their freelance fees. Raffaele Mauro showcased Mexican Kiwi, which offers debt-free payment system for products and medical services.
Yet while social finance is no longer a paradox, these companies were still the exception rather than the rule. Most Fintechs still have generating profit as their underlying motivator, being socially conscious has not infiltrated the whole sector – though promising first steps have been made.
There is certainly a lot of development in the Fintech sector – but there is even more room for growth. With 7 out of 10 millennials rather visiting their dentist than their local bank, trust in, let alone support of, banks is severely lacking. To learn more about how jovoto is helping shape the future of banking and finance, download our white paper on the power of collaborative innovation in the financial service industry.