Skinny Latte for Cameron
On his trade trip to the Far East, “FinTech” was to David Cameron what “Prudence” had been to Gordon Brown.
So what is FinTech and why does it matter so much to our Prime Minister that he was flogging it all over the Eastern hemisphere?
Financial Technology is nothing new, 40% of London’s workforce, according to Mayor Boris are engaged in it and I’ve been lugging a laptop round with me since the mid eighties,
But what David Cameron is getting excited about is the new wave of financial innovators that he sees powering the British economy and leading the world.
To an extent he is right, Britain is leading Europe in developing applications that assist our activities of daily living. Europe still lags America but pound for pound Britain is boxing well above its weight.
With Cameron in the Far East were an eclectic mob of FinTechnicians, collectively known as Innovate Finance. Innovate Finance is a lobby group which I suspect spends far too much time in the Ace Hotel Shoreditch High St, Google Labs and the Innovation Centre half-way up Canary Wharf Tower.
Innovate Finance is supported by all the big UK financial institutions but it’s really about the start-ups and growth accelerators and all the flotsam and jetsum that have got first and second stage funding and may (note may) be the next big thing.
This is absolutely as it should be. Pension PlayPen would like to be on the caravan but at £1000 pa for a start up, the ticket’s too pricey, there’s a lot of financial innovation you can buy for £1000 and I’ll do my lobbying on the blog (thanks very much)!
Technology that gets used
For me, Financial technology gets exciting where it’s being driven by a genuine need. Uber came about because of the unsatisfactory state of taxis, Pension PlayPen came about because of the disintegration of corporate pension advice. The really good FinTech companies I come across, Sammedia, MoneyHub and Nutmeg are applying themselves to real-time financial problems people have, not bathing in the light of their shiny algorithms.
As the boss-man at Nutmeg told me , if my stuff isn’t getting used- it’s useless.
The vast majority of the applications that get built are pure vanity. CEOs get excited by having an app and showing it off to their fellow CEOs as a badge of honour. The best apps are not there for show , but there to get used, indeed Moneyhub build their apps for mobile use and build back to laptops and full screen PCs – which are very much secondary technology. Moneyhub’s research suggests that most people would prefer to do personal finance stuff away from the workplace in the comfort of their own hands.
Technology that is proportionately regulated
The joint paper from the FCA and the Treasury launched yesterday, is informed by the wider global debate about what can and cannot be done on a laptop and handheld device.
Without the oversite of a physical adviser, can these applications be properly used to take financial decisions?
In some markets , it seems almost impossible that they won’t. The 1.8m employers staging auto-enrolment are not all going to sit down and sort matters face to face with an adviser, there will have to be FinTechnability.
But there is nothing to stop FinTech being abused. Dick Dastardly used to stand at the junction of the wacky-races, railroad and send his rivals off to certain oblivion , by switching the points. Much the same can be done with the “UX” (user experience/employer journey) on a FinTech excursion.
This week , the Pension Regulator has a free pass and is road-testing http://www.pensionplaypen.com. Our video -while not quite viral – is well watched and at one stage yesterday we had 542 concurrent users of our workforce assessment! The latter number may have been distorted by 3rd party stress -testing, but this shows that we are receiving a degree of due diligence and this is a sign of the market “self-regulating”.
Why does FinTech matter
I suspect that David Cameron, like the CEO, is more interested in what FinTech does to the brand than how it helps the consumer. Right now it is trending.
But FinTech is simply the way to get to a better place, the better place is what consumers have their eyes on, not the mode of transport.
For intermediaries, who help in the transportation process, there needs to be proper due diligence- from Regulators and the trade bodies they rely on.
And for the entrepreneurs who create the means of transport, FinTech has to be about outcomes. The need must come before the greed.