Sometimes I get invited to small gatherings, usually media roundtables, where I’m not holding out for a great story, but I attend to network and occasionally find a nugget of inspiration for these blog posts. At worst, I get a nice breakfast or glass of red out if it, at best contacts for a feature or an angle for a story.
However, after I attended a recent fintech roundtable focused on consumer payments, I stared at a blank screen and wondered whether what I write will paint me as a cranky, old journalist, albeit one with 30 years’ experience reporting on the technology used in the financial services space.
Or will it shed light on a deeper problem I see creeping into fintech? A problem where the builders of new, innovative products offer superficial, cliché-ridden, corporate-communication-approved answers to real questions about the impact of regulations, and the role these new services play in wider society.
Whether looking at the wholesale or retail markets, fintech discussions usually include a nod to how emerging technologies and innovative business models will impact “legacy banks”.
Now, examining the future of “legacy banks” is a common and completely valid fintech talking point (and very much my bread and butter). However, I do feel if anyone is going to have a conversation about how technology, behaviours and regulations are going to impact an established sector, they should have some basic knowledge on how that sector operates.
Banks serve a particular purpose in society and, because of that, they are subject to a set of regulations that other sectors that also serve consumers are not. Banks are, very often, not everyone’s favourite business — “like” and “my bank” are almost never seen in the same sentence (#HugABankerToday ;-) ).
Banks have trust, trust with our money, because they are secure, regulated entities. Looking at banks as just another consumer brand, subject to the same winds of customer behaviour that see a run on trendy water bottles or viral jeans is a dangerous and fundamental misunderstanding of how global financial services — both wholesale and retail — operate.
Recently, I attended a fintech gathering where a journalist asked a trio of senior leaders how the UK’s upcoming push payment fraud regulation will impact the overall fintech ecosystem.
The question was met with, well … *crickets* (the three had to be told exactly what the regulation was — these are people who work in the global retail payments sector).
At that same event, a CEO in the embedded finance space was asked if they are just the distributors of financial services (like Facebook and YouTube are just the distributors of content, supposedly), where does the responsibility to the consumer lie? (Especially in regard to the Consumer Duty — another UK regulation anyone involved in this space should be aware of.)
The answer that came back started with: “We need to believe in the art of the possible…” and went downhill from there. One of their partners at the table joined in with: “Technology is evolving at a rapid pace…”, while the third member of this paytech trio responded with: “[Well known consumer brand] doesn’t just partner with anyone.”
None of the above means anything, and more importantly, it doesn’t answer the question. Embedded finance or banking-as-a-service, or however you choose to describe it, isn’t just a trend that changes who owns the customer. It impacts where the ultimate regulatory responsibility lies. The three fintech leaders at this particular roundtable didn’t refuse to answer this fundamental question about BaaS, they failed to articulate an answer because they didn’t have one. That is what I find dangerous.
I realise not every journalist is as deep in the payment nerdom as I am. But those around this table were asking intelligent questions about regulations, customer impact, and financial literacy. Those answers were met with trite, meaningless phrases straight out of a tech bro cliché handbook, handed out like nuggets of wisdom.
“Young people would rather go to the dentist than their bank.” Really? What exactly does that mean? Even those derided legacy banks allow customers to do almost everything via their app these days. Dentists can’t exactly perform a root canal via Zoom. Of course people visit the dentist more than a bank branch; the reasons have nothing to do with whether people like their bank.
At one point one of the group held up his mobile phone to tell me: “This is what is driving all of these changes in customer behaviour.” I had to struggle to maintain a straight face instead of collapsing in laughter. You don’t have to have 30 years as a tech journalist to recognise how smartphones have changed customer behaviour, globally.
I understand I am moving into the aforementioned cranky, old journalist territory here with this rant. But, as it is UK Fintech Week, my passionate plea to the industry is this: understand the regulations that impact, and will impact, your sector. Understand, when it comes to financial services, customers don’t want to be dazzled; they want secure, easy-to-use, comprehensive products that meet their specific needs, where and when those needs arise.
And make an appointment with your dentist soon; good oral healthcare shouldn’t be ignored.
Liz is deputy editor of The Banker. You can connect with Liz on LinkedIn, or follow her on Bluesky.
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