The past 10 years have seen both incredible technology disruption and the proliferation of financial disruptors – and the pace of change only seems to be speeding up as we head into 2020.
As we start a new decade, maybe it is a good time to reflect on the past one. In 2010, most banks were still reeling from the 2008 crisis: the European sovereign debt crisis was yet to come, Brexit was far from anyone’s mind, and fintech wasn’t even a discussion.
A decade later, some of the world’s biggest banks are in danger of extinction; the UK is a divided nation; Europe is struggling to maintain momentum; and more than 12,000 start-ups have gained hundreds of billions of dollars in investment to restructure banking using technology.
What an amazing decade we have just witnessed. But, standing back, do you ever ask yourself: what happened? What created this? Will it disappear? Should I worry?
Unparallelled developments
Ten years ago, two technological developments changed the world – not just in banking, but everything. Those two things were cloud computing and the smartphone.
Cloud computing allows anyone to launch a new idea with next to zero investment and watch it scale and grow on demand; while the smartphone turbo charges what people launch in the cloud so that (if it is any good) it can scale and grow on demand overnight. This is the basis of the technological revolution of the past decade, and why so many fintech start-ups are taking off around the world.
From challenger banks such as Nubank in Brazil to Craft Silicon in Africa, to Ant Financial in China and Paytm in India, the past 10 years have seen a fundamental change in financial services. Finance now reaches the richest and the poorest, the most and the least connected, urban dwellers and villagers, and the very young and the old. It reaches everyone, everywhere, all the time, any time. This is the change driven by cloud-native networking.
Even banks are now cloud native. Some are shifting common services such as payroll and human resources to the cloud, while others have gone further and moved their marketing, sales and administration into the cloud. Some have even gone as far as moving mission-critical services such as payments and settlement to the cloud (a private cloud, of course, but still a cloud-native service).
Therefore, as a new decade unfolds, we are left wondering what will change in the next 10 years? Obviously a lot will change, but do we have an inkling as to what will be the major forces for change? In 2010, I knew the smartphone was a game changer and that cloud would reshape finance. What do I think in 2020?
Cue the data war
I think we will see even more fundamental fracturing and reshaping of finance with technology. As the artificial intelligence and quantum revolution takes over, we will see the ‘network’ being embedded in everything we do. You won’t be able to breathe without some processor somewhere recording it and passing that information along.
Who gets that data will be key. You cannot apply intelligence to something, real or artificial, if you don’t have the data. You need the data to be intelligent, and the data war of the next decade will be the most significant battle that every bank will face.
If your bank has already awoken to the game, readied the troops, organised the arsenal and is deploying the feet on the street, then you can fight the 2020 data war. But if you are just sitting there, like 10 years ago when you thought that technology was not that important, well, your army is just not ready and won’t cut it. They will be bruised and integrated into some other bank’s army, or maybe a start-up, telco or technology giant.
This is the decade where technology will truly sort out the bank winners from the losers. Are you ready for this decade? Are you fit? Do you have the right team? Does your leadership get it? That’s what you should really be asking yourself as we start 2020.
In 2010, I asked myself: what’s the number one concern of bankers? The answer was regulation. In 2020, I ask you what should be the number one concern of bankers? Enough said.
Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.
