July 4, 2018 / 3:17 PM / 5 months ago

Evolution not revolution: Financial services of the future

The story surrounding the banking battle to keep customers happy, as challenges emerge from FinTechs, is not a new one. However, Barclays is embracing this competition – not to mention the other winds of change, such as Brexit and new regulation across Europe.

Rules and regulations are fundamental to the trade or transport of goods and services in the European Union. With Brexit on the horizon, there is much talk of ‘frictionless trade’. But what about financial services – and FinTech specifically? Host Paul Henley welcomes Susanne Chishti, CEO & Founder of Fintech Circle & Co-editor of ‘The FinTech Book’, and Martin Griffiths, Barclays' Head of FinTech, to discuss these key points and more.

Collaboration over competition

Barclays’ recent strategic partnership with PayPal is indicative of the continuing evolution, rather than the need for total revolution. It gives consumers and business customers a new, seamless way of linking their two accounts. It’s an example of how banks can transform and make their trusted brands stronger, wherein banking experience and innovation are key – this evolution isn’t a full-on collision with large technology companies.

Banks are part of the solution

“FinTechs still need banking payment rails. It’s not in their interest to completely destroy banks. There is still a need for them to be part of the solution. The more we look at collaboration, innovation will enable us to thrive alongside FinTechs,” says Martin Griffiths, Head of FinTech at Barclays. He adds, “There will be new business models – maybe it won’t be all about payments. We’ve got to be open to thinking about what consumers need, what the experience is that the end users want.”

Trust, above all

As established financial services companies strive to stay relevant in a disruptive world, FinTech start-ups would do well to draw on the histories of these corporations and learn how to build businesses that last. Security, privacy and compliance — these are core issues that are hard to replicate. “Consumers trust banks and until some of these businesses have the same scale and the same level of trust, they’re not going to be looked at as the first alternative for most consumers, for quite some time. I think the crypto space is seeing that. Who do you turn to when things go wrong? The banks have got a longstanding reputation for servicing problems,” according to Barclays’ Martin Griffiths.

The millennial wallet

Interestingly, this desire for experience and trust over the latest piece of tech is seen in Telstra’s global research on millennials (aged 18-34). It found that Barclays Bank has the largest proportion of millennials among its customer base. This is significant because this demographic now makes up one third of the world’s population and within ten years it will have overtaken Gen X (aged mid-50s) as the primary source of profit for institutions.

An open future

So, as financial service providers look to woo new audiences and explore new partnerships, the future for FinTechs and banks alike looks exciting. Rather than seeing PSD2 and open banking regulation as a threat, Barclays sees it as an opportunity to innovate and build on our existing products. “PSD2 should accelerate the European FinTech sector – depending on the transposition of how banks themselves interpret it. We’ve been very supportive of it and have been preparing for it for quite a while,” adds Griffiths.

Brexit – and beyond

Another change businesses from all sectors have been preparing for is Brexit. Many are planning for the worst and hoping for the best. Barclays is building a pan-European platform so it can adapt to whatever new regulatory framework there may be, according to Griffiths. He says: “Businesses want to get access to consumers and they’ll go where the business is. And the regulation that’s been around has made it difficult for certain businesses to thrive. With open banking, that’s starting to change. And there is definitely room for growth. The key issues are regulation and the transposition of regulation. If we get clear and sensible regulation then it will enable that market to thrive.”

There is a paradigm shift happening in banking and financial services as a whole. Of that, there can be no doubt. While no-one can reliably predict how the sector will be structured in the future, banks that digitally adapt, stay nimble – and above all, put customers first – will win in the long-run.

To find out more about how Barclays can support your business across Europe, visit: barclayscorporate.com/Europe

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