Cash & Liquidity ManagementPaymentsTowards open banking: can street food teach us about fintech?

Towards open banking: can street food teach us about fintech?

Why the gourmet street food movement could provide some powerful lessons for the emerging fintech industry

Are you the type who gets easily irritated by restaurants and the fuss that surrounds fancy food and dining out? And, do you wonder what all the fintech fuss is about, if your existing bank account is perfectly palatable? Money is just money, right? Well, if you’re content with a meat and two veg approach (with regards to food or banking), then this article is probably not for you.

But, if you’re curious what trend setters are ‘consuming,’ the vibrant fringes of the restaurant industry provide an easily understandable – not to mention appetizing – reference model for disruptive competition that caters to changing consumer demands.

Food for thought: Behavioral economics

Personally, I’m not too fussed about the physics of browning, or the chemistry of caramelization – I’m more interested in the softer sciences of behavioural economics. Sure, the fundamentals of raw materials, supply, assembly and distribution can be modelled. And the economics are reasonably straight-forward, regardless of whether you’re considering a Michelin 3-star restaurant or quick bowl of takeaway noodles. But figuring out exactly why consumers gravitate towards new products, and what precipitates this change, isn’t quite so easy.

The rational economist’s viewpoint would suggest that no normal, reasonably developed town could support more than three, or maybe four, dominant restaurants, accounting for 90% of all business. The reality is different, however, and there are clearly innovative forces at work within the food industry, which create competition and variety, and cater to personal tastes and (sometimes) irrational trends.

The rise and rise of street food

Around the world, food vendors continue the ancient tradition of carting their wares with them; whether it’s a hot dog from a street corner in New York City, freshly roasted chestnuts from a German Christmas market, or Chinese-Portuguese fusion food from a London market.

London is the epi-centre of Europe’s street food movement, with supper clubs, food trucks and market stalls, popping up in the most unlikely of places. Now you can eat Michelin-starred food, literally, on the street corner. (A Singaporean restaurant sold their Michelin-starred dishes for £6 a pop at a street food market in King’s Cross only recently).

This changing of the guard is playing out globally, too. In the US, Wendy’s, McDonalds and other quick service restaurant chains (QSRs) now include food trucks in their inventory. In established restaurants, diners are also looking for qualities they’ve come to appreciate from small independent food vendors; namely fresh, seasonal ingredients, sustainability and local produce. Provenance, honesty and openness have now become basic hygiene factors in high-end dining.

What can food teach us about fintech?

Could it be that the steady rise of street food has been correlated with the start of the great banking crisis? Perhaps it’s merely happenstance, but the gourmet street food movement provides a powerful analogy for the emerging fintech industry. Arguably they started at the same time – the financial crisis of 2008. Both generate a lot of attention – but not always positive. Existing established businesses understandably do not necessarily warm to disruptive newcomers – particularly when costly overheads relating to regulations and licensing don’t seem to apply to the ‘newbies.’

“Could it be that the steady rise of street food has been correlated with the start of the great banking crisis?”

In the civic world, many local city governments have promoted the street food revolution as a way of creating “cool” new facilities in towns, helping with regeneration, and attracting more entrepreneurs into the ecosystem. Over in the banking world, many national governments are now behaving similarly, forcing established banks to share space with upstart fintechs. Part of this is a belief by authorities that fintechs are better able to deal with new consumer demands than established big banks. One of the challenges is that the products consumers want often cannot be predicted or planned for by larger, more established organizations (it’s the same for banks as for grand old restaurants).

Many successful street food vendors have progressed to pop-up stalls and small chains, and have even exited into bigger food businesses. That includes Chan Hon Meng, the Singaporean hawker whose success has been a springboard to a larger quick-service restaurant, as well as cross-border expansion to bring Hawker Chan to Melbourne and Bangkok.

So, will street-food vendors and market stalls take over the dining world, throughout Europe? The impact of the street food revolution on the established dining world may be profound, but most likely, the answer is no. Again, the comparisons with fintech may be prescient – account holders with new banking startups may be a tiny fraction of those at established banks, but the impact of new consumer demands that are serviced quickly by fintechs are likely to have a disproportionate effect on the speed of change at big banks. Over in the UK, where new Open Banking rules have now come into effect, new payments businesses such as Third-Party Providers (TPPs) are being encouraged to accelerate this effect.

“The impact of new consumer demands that are serviced quickly by fintechs are likely to have a disproportionate effect on the speed of change at big banks”

Consumer preferences (for food and for financial services) can indeed be irrational and unpredictable. Sometimes, it’s best to capture these new demands by allowing smaller organizations with lower regulatory overheads to start up and see what develops. Sometimes, it’s best to ‘Open Up,’ to allow new forms of competition to rejuvenate the market, even if it risks upsetting the old ecosystem. Perhaps some of these new fintech ‘stalls’ will capture specific consumer tastes, and grow into pop-up restaurants, then bigger restaurants, maybe even bigger chains. And maybe their partnerships with major established banks that still retain high levels of consumer trust will prove to be the stamp of approval – or better still the Michelin-star rating – for their fledgling fintech venture. One that will lead to long lines of consumers eager to get a taste of the next big thing.

 

Lu Zurawski, ACI Worldwide is a regular columnist for The Global Treasurer. Zurawski is a renowned expert in the payment field with nearly 20 years of experience. He has engineered complex business transformation programs and has a strong innovation record, including work on one of the world’s first mobile payment schemes.

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