In the latest episode of the FinTalk podcast, we talk to head of Innotribe Fabian Vandenreydt about key trends in emerging financial technology, what to expect from Sibos and why there’s never been a better time to collaborate in financial services.
This week is SIBOS: probably the most significant gathering taking place in the global financial community each year. Run by financial messaging services provider SWIFT and hosted in Geneva this year, the conference first launched back in 1978 with 300 attendees. By last year the community of attendees had boomed to 8,000, highlighting not just the momentum building in this sector but the growing appetite for collaboration between traditional financial institutions, vendors, investors, regulators and new entrants.
Innotribe is the part of SWIFT tasked with identifying emerging trends in financial services innovation, as well as generating discussions about how these trends will impact the industry going forward. Born in the ashes of the global financial crisis, it aims to take the industry beyond talk and into action. At Sibos, Innotribe runs the startup and industry challenges, which identify the most promising startups from around the world and pulling together task forces to start working on barriers facing the global community.
In the latest episode of the FinTalk podcast, we talk to head of Innotribe Fabian Vandenreydt about key trends in emerging financial technology, what to expect from Sibos and why there’s never been a better time to collaborate in financial services.
https://soundcloud.com/bobsguide/fintalk-9-fabian-vandenreydt-head-of-innotribe-swift
What is Innotribe and where does it fit into SWIFT?
It’s an initiative we started in 2009 – its purpose when it was created was to bridge the communities of financial service banks and startups and start talking about how banks would benefit from innovation in the startup scene. It’s a network of startups, venture funds, coaches and heads of innovation in banks.
Our role is still the same after all these years: to improve the status of financial services innovation through collaboration across the full ecosystem of banks and startups.
Why is there a need for something like this?
The need evolved of its own accord. Back in 2009 there was no such thing – ‘fintech’ did not even exist as a word and there were a lot of barriers between startups and banks in terms of language, expectations and objectives. At the time fintech it was very much concentrated in certain cities and areas as other was real a need for translation and trying to make people work together.
Over time startups have became more mature and banks have evolved in terms of what they can do with startups
Today, maybe the translation element is needed less and globality is needed more so that global institutions can work with startups wherever they are. The notion of connecting ecosystems on a global scale is more important than translation now.
The industry has changed a lot since Innotribe was born, what have been the most interesting trends to emerge?
2009, when Innotribe was born, was right after the global financial crisis.
After that financial institutions’ budgets were very much dedicated to compliance with regulatory requirements. The discretionary budget to become better and serve clients better was smaller than it is today. There was real need for external innovation.
Since then maturity has evolved in the sector – you see banks setting up venture funds themselves, startups becoming larger companies, acquisitions and partnerships. The topics of innovation are also evolving – back in 2009 we were very much talking about retail banking.
Today it’s all things ending with ‘tech’ – wealth tech, insure-tech, fin tech, reg tech and so on. It has percolated across different businesses. It is also more B2B than in 2009.
What sectors are you particularly excited by?
I work for a firm that is at the basis – with others – of infrastructure of financial services wholesale so we are looking at things that will evolve the landscape infrastructure like big data, distributed ledger tech and eventually IOT – things that have the promise to evolve the underlying infrastructure.
Looking more at verticals, it’s things like robo-advisory and everything related to better security and user experience.
Where does Sibos fit into what you’re doing?
Sibos is the yearly conference organised by SWIFT and within that Innotribe is part of the agenda with its own four-day programme.
Every year we try to evolve the conference and the overall theme this year is disrupting the landscape.
Within Innotribe we will talk about four things: how to handle disruption in emerging geographies and technologies; how to organise for complexity as a firm and as an individual; the relationship between man and machine, so AI, robo-advisor; organisation impact and platform economics – how to organise an eco-system for the benefit of members.
What are the industry challenges?
When we started in 2009, we started doing challenges – competitions to select the best startups from around the world. We still do that but this year we’re doing that with a focus on emerging ecosystems in LATAM and Africa. Our view is that there is enough of those competitions in more mature marks like London and San Francisco.
Beside that we created the industry challenge, which is a way to address an industry opportunity or topic – the first one was about blockchain in the capital markets.
We take a few startups from our network who we have screened already and who are experts in field, plus a few customers and SWIFT people. Over a few days we sketch out some areas where we want to experiment and from there we select subset of startups to work in incubation mode for several months to find a solution.
How much has global ecosystem developed in last few years?
It is an evolution. Clearly London and the West Coast paved the way, but now it would be unfair to say it is only those two.
It is important for an economy or city – it is a great way to increase attractiveness of that city in terms of employment, talent pool and aura in the world. We’re seeing hubs in continental Europe like Berlin and Zurich and the likes of Singapore in Asia starting to function well.
Does it matter where fintech startups are based these days?
Yes it does. Is it a competition? Yes and no. Yes because each hub wants to attract investment and startups but on the other hand each one has diff specialities.
Global banks want those hubs to work together -so they can access global innovation. Those hubs need to develop around the world so startups can access bigger markets and banks can look at innovation from a global perspective.
We really want to help build the community between the different fintech hubs – we recently announced the Global Federation of Fintech Hubs in collaboration with Innovate Finance in the UK.
The idea is to elevate the level of global innovation hooking the hubs up together and helping banks innovate globally.
Where are we at with blockchain?
We look at blockchain from the perspective of our role in the infrastructure that provides global infrastructure for Financial Institutions.
We are interested in how we can look at blockchain as part of a bigger platform that is scalable and resilient and can serve the needs of several thousands of customers.
We published our R&D roadmap in April where we sketched out eight domains where we thought more work was needed. That work is happening
The tech is progressing well and we are at the point now of looking at how to scale up and make it backward compatible. People have invested a lot in existing platforms that the don’t want to get rid of so the tech needs to be integrated with what is already there.
Other domains that need work are to do with the standardisation of flows so people can talk to each other and governance. Today there are still lots of different technologies – we are not at the point where we will end up with a VHS/Betamax situation where only one will win – there are still many. Efforts like Hyperledger, which we are part of, are working to provide better standards and governance so that we can scale the whole environment and make it cost efficient and secure for anyone who wants to adopt it.
We are confident we are making progress on the tech side but there is also the business case and the transition from existing to new – governance and standards are important for that.
What have been the most significant developments?
The most interesting developments are everything that relates to business rules automation, or smart contracts, which provide a layer of process automation, standardisation on top of distributed ledger, opening new possibilities for new institutions and banks.
What is also interesting is how this can create transparency in the value chain while maintaining security and privacy. There has been progress there and on many fronts. Is it ready for prime time big time? Maybe not yet but it is certainly moving quite well.
I don’t think it is a silver bullet though – I do not believe any use case in the world can be addressed by just distributed ledger. It will co-exist with other solutions, either existing or new ones but I never believe in things like a silver bullet – its’ a pipe dream that is not very realistic.