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.
What's working?
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).
What next?
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!
References:
Here are some of the resources and companies we discussed in this
episode:
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