Nov 25, 2015
If I had to choose just one episode of Barefoot Innovation to
introduce listeners to the series, this is it.
My guests are Jesse McWaters of the World Economic Forum and Rob Galasky of Monitor Deloitte, who co-led the WEF's landmark research project on financial technology (executive summary here). Switzerland-based WEF focuses on public/private collaboration and is best known for hosting the annual global forum in Davos.
When I first read news accounts of this report, I reached out immediately to Jesse and (new father) Rob to ask them to join our dialogue. It took some time to get together, but we finally met at the WEF offices in New York. It was more than worth the wait.
They launched their study of the global evolution of fintech at the Davos meeting in 2014. By the summer of 2015, they had crystallized the keys to understanding it. Their work is built on extensive interviews and on the technique I increasingly see as the key to progress -- convening disparate participants. They held six meetings with traditional financial institutions, disruptive innovators, and regulators in the same room, grappling with the coming change.
In their early meetings, the financial industry executives were interested in fintech and wanted to monitor it, but were not worried - Jesse and Rob call them "tepid" about its urgency. By the end, this view had reversed. My guests use words like "bewilderment," "paranoia," "enemies" and "invading the fortress" as they describe the financial industry's rising concern. They also see these concerns starting to give way to hopefulness about the opportunities.
The 193-page study has a global scope, emphasizes the developed world, and looks at eleven areas where innovation is driving transformation.
Here are some of the insights Jesse and Rob share in our conversation:
Advice to industry:
Jesse and Rob discuss how all this is impacting the traditional industry, including this advice:
Understand the likely sequence in which products will be forced
to change, and why - they explain this in our discussion
Impacts on consumers:
Rob and Jesse predict big changes for consumers, including vastly more choice, hugely better customer experience, better pricing, and much better insight into and control over their own financial lives. They also see rising risks and regulatory needs, including that consumers will be harmed by unsuitable, high risk products.
Advice for regulators:
Jesse and Rob also have insights for and about regulators. Some of the regulators who joined their meetings were among the most thoughtful people they encountered, but they also warn of a very wide delta between the "leaders and laggers" in the regulatory world. They predict likely regulatory arbitrage if that gap does not close quickly. They also emphasize the need for "regulatory sandboxes" (on that point, watch for our upcoming Barefoot Innovation episode on sandbox innovation with Nitish Pandey of BMO Harris).
The project plans to leverage its convening power to tackle further priorities. One is exploring the revolutionary potential of block chain technology and distributed ledgers, including and beyond bitcoin.
Another is seeking innovation in managing digital identity, including expanded roles for banks.
Might our bank someday help us buy a bottle of wine by sending not only the money, but by verifying our age!
Enjoy the episode!
Here are some of the resources and companies we discussed in this episode:
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