By Kent Mackenzie, Director, Risk Advisory, Deloitte
“People often ask me what makes me so interested in fintech – one could always argue that it has been around for years. “But I think there are three reasons why it’s important now, and why we have a once-in-a-career opportunity to explore how new technologies can address market failures in financial services and create a more financially inclusive world.”
The first is regulation – with the introduction of the 2nd Payment Services Directive and Open Banking will be pretty seminal. What we will start to see is the ‘democratisation’ of payment and transaction data, and data is the lifeblood of Fintech, any tech. Of course, GDPR will quite rightly ensure and mandate that the right privacy controls and security encryptions are in place around our data, but in the main allowing access to rich data sets through APIs will create a whole generation of financial service solutions. What will become very interesting is seeing how other industries as well as emerging Fintechs and start-ups might begin to use this data to augment services, or create new ones.
The second is customer sentiment – consumers want to be able to access services at any time and in any place, they don’t want to have to go into a bank branch to open an account or spend 2 hours on the phone talking through their income, navigating lengthy and complex mortgage processes. These are 2 simple examples, but let’s be honest, if banking was embedded as part of our everyday life, intuitive, and invisible the overall customer experience would be much better. Globally last year, and for the first time the majority of financial services transactions were initiated through non-bank providers. Kent refers to an insurance concept he is developing that looks to automatically and dynamically re-price car insurance based on time of day, weather, who is in the car, and the time of day and route being driven…all managed across a distributed ledger, now that would be a good customer experience.
“The third is the exponential growth in technology. Together, those three elements mean that there’s a great opportunity for fintech to thrive.”
Closer to home Kent is passionate about the opportunity Scotland has to burst onto the stage, and indeed some of this work is well underway in the Fintech Scotland strategy he has been partnering Scottish Financial Enterprise and Scottish Enterprise to develop and deliver. Kent and his team were commissioned by Scottish Enterprise to compile a report into how the nation could be turned into an international fintech hub. ‘I remember sitting late at night writing the report, pulling threads and digger deeper into what exists in Scotland and what we need to do to deliver our potential’ It turned in a 100-page study that was published last May. ‘I remember feeling a bit like a detective hot on the trail of something huge – doing a lighter study or not exploring all the finer points would have been doing it a dis-service’.
His report’s recommendations included creating a physical hub or accelerator centre at which events could be held and people from different backgrounds – from programmers and developers through to bankers and insurers – could meet and increase the number of “collisions” for new ideas to be developed, just as Bill Gates described during the early days of Microsoft.
His other suggestions included protecting the stream of talent that Scotland already has in the tech sector by working with teachers in secondary schools to encourage pupils to consider careers in fintech, and finding ways to bring the underrepresented to the centre of fintech, e.g. women, parents returning to the workforce, experts and revolutionaries in remote parts of the country, etc.
Kent also talks about Scotland’s first “datathon”, which Deloitte held in March as part of the Data Lab’s DataFest17, during which he spoke with pupils who had become engrossed in technology and have incredible ideas about what financial services of the future could, and should look like, and importantly how we promote far better financial inclusion.
“We also need to be a bit ‘less Scottish’ when it comes to promoting ourselves,” “We have world-class universities in Scotland, exceptional and well-established technology talent and our financial services industry has a long track-record of innovation – we invented the automated telling machine (ATM) for goodness’ sake – we should be pointing out that we are the original fintech pioneers! “We need to be a bit more west coast about celebrating what we have here (he points out he means west coast America, not Glasgow..) . We need a Liam Gallagher for the fintech sector – someone who will make some noise and shout about our potential”