The 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.