Jun 21 | 2017

What’s Happening in FinTech?

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Top FinTech LearningsThe spring season brings a lot of activity to the financial services space in Canada. It’s one of the busiest times of the year for typical “money out” campaigns from our banks and coincides with strong activity in listings, transactions, and ultimately closings.

More recently the spring season has also come to signal the start of FinTech conference season across Canada. The size and scale of these events continue to grow while our own homegrown talent is taking center stage. With over 250+ FinTech companies across Canada and $1BN in cumulative venture capital investments, Canada is well on its way to solidifying itself as a global center for financial innovation.

As Head of Product at FCT, one of my primary responsibilities is understanding how the needs of our lenders are going to be changing over the next 3-5 years. Internally, we’ve been aggressively transforming our own product portfolio and expanding our focus on hybrid solutions that leverage the best of our financial technology, business process outsourcing (BPO) capabilities, and insurance expertise. As I have been working through the process of how we align our own product roadmaps to these opportunities, I wanted to share more broadly what I’ve learned on the conference circuit throughout the year.

Developments in FinTech

Opening up financial services data:

  • The European Union is already well ahead of North America when it comes to FinTech penetration. In an unusual role reversal, we actually see governments across the globe leading the charge to create an environment that is conducive to FinTech growth and innovation.
  • Initiatives like the European Union PSD2 open banking API, where by 2018 all lenders will be required to open up transactional data (with user permission) to enable third parties to build new types of financial services is one important example. While Canada is definitely lagging in this area, there are several opportunities to target key data as a starting point and use that information to re-engineer how financial services are delivered to customers across all segments.

While cash flow will always be king, managing identity in the digital age is close behind:

  • Online identity is the next cycle of the internet and as we see more and more digital lending platforms that don’t require in-person interaction, there is more of a need for identity management applications that simplify and perfect authentication/verification, early detection of fraud, and are adaptable.
  • Contextual commerce is the next major area of growth in the financial service space. This area deals with making payments through internet connected devices that are not a smartphone or laptop but rather devices like Amazon Echo, Google Home, Oculus Rift, and even your connected car. Thinking through the connected car example, how would you know the driver of the car is the right driver to offer a service?

Homegrown products will find greater product-market fit than global imports:

  • Canadian built and managed FinTech solutions will have the advantage over more global or regional efforts that try to ‘Canadianize.’ Rethinking financial solutions from the ground up will provide another advantage. The underlying point here is a true need to take a product-driven approach to building new financial services as opposed to a clone strategy from other markets.
  • For example, at FCT we believe understanding your customer segmentation in FinTech is critical. Existing companies overly rely on safety, security, legacy as the bread and butter of their solutions. Those features are table stakes but do not do enough in isolation to capture the wallets of the millennial, and eventually Gen Z segments. Great user interface and user experience, smart use of data, and transparency are at the top of the decision matrix for these segments and are causing radical reinvestments in technology talent across existing companies of all sizes.

This is the year of blockchain….or maybe its Ethereum… but it’s time to see RESULTS

  • By now everyone has heard of blockchain and the power of the underlying technology in financial services, but the conversation is FINALLY shifting to the business opportunities and that will be the catalyst for blockchain-infused products to gain traction. Experiments like Project ‘Jasper’ which is a Bank of Canada + Big 5 proof of concept with blockchain to reduce reconciliation efforts in payments systems are examples of the results and value of using distributed public networks.

We strongly believe that we are less than 12 months way from seeing the first mainstream pilot for tools like smart contracts and we are even bigger believers in the truly disruptive nature of these technologies.

I’m incredibly interested in your opinions and welcome comments. If you are passionate about thinking differently in the financial services space, I’d love to chat and can be reached at rlambert (at) fct dot com or through LinkedIn.

Nov 4 | 2015

Financial services “scrums”—fail early, fail fast

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success-failure_smallIn our EXPERT/ease special feature this month, we’re taking a deep dive into the world of persuasion and failure and the completely improbable relationship between the two.

Failure isn’t something most people want in their working lives, but in one of the fastest growing industries (and most influential) on the planet, software design, increasingly there’s way of working call “agile”—and software is all about “iterating”: testing, failing and testing again.

What this means is that you and your team are fundamental: live as openly about the work you share as you humanly can be.  Plus the whole focus of this way of working is not to be sequential or traditionally “linear” about how you’re solving problems.

Scary? Nope: you’ve done this already, especially if you’re a parent or you’ve taught anybody anything.  You go with what you’re presented with, rather than imposing an external pattern: you self-organize.

Agile teams self-organize and respond fast because—as in life itself—software product requirements often change in the course of the project. Customers’ plans change, market conditions demand a new feature—what software developers dryly term “requirements churn.” The design itself, no matter how well thought out, is a moving target.

Sounds a bit like mortgage process flow, doesn’t it?

Highly specialized financial services team often work this way, especially in product development, where production cycles are growing shorter and planning itself is now often far more collaborative than top down. Everybody on agile teams watches everybody else’s back. Workloads are monitored to ensure that errors are identified pronto.

A rule of thumb worth bearing in mind is that no team member should have more than two simultaneous selected tasks, and that, on the other hand, not all team members should have two tasks simultaneously.

That co-operation focuses on business value versus development resources daily, because agile companies meet (usually standing up, to keep meetings focused and tight) at the top and end of every day, to monitor progress. At the heart of this way of working is the “scrum,” where the team, working as closely together in the same space as possible, literally goes nose-to-nose on a problem until it’s solved—and failure is a given.

No failure, no product improvement.

Scrum is a process that enables teams to achieve a level of continuous improvement. It revolves around operating in short cycles called sprints with built-in opportunities for teams to prioritize their workloads, hone in on and attack the few things that truly matter, identify what worked well and what could help them perform better, then rinse and repeat.

The nose-to-nose part’s important—”agile” doesn’t work for virtual companies in remote locations, apparently—but the life lesson for those of us who’ll never get anywhere near a software development scrum is this: if you want to get to good fast, fail fast.

This openness to fail-and-change workflow—the essence of the improvisation so essential to innovation—makes for far higher likelihood of desirable outcomes, patterns of swift fault discovery and fixing of faults.  In fact, these patterns give agile scrum team members very short cycles to identify and repair poor initial outcomes. The more you fail, the faster you learn; the patterns of failure/discovery/learning/redesign are key to the business value of the software company.

It’s definitely worth a read. The Deloitte PDF shares a subtle point: scrum/agile plays well with orthodox oversight, such as requirements gathering, conceptual design, budget and critical path/schedule forecasting.

If you’ve a new financial services product with a tight deadline and lots of potential for variations, there’s a lot to recommend scrum.