Thoughts on the future of fintech

By on Feb 2, 2016 in Editorial |

Royal Society, London, January 13th 2016.

I was recently invited to attend the West Minster Business Forum, for its Future of Fintech conference. Having had a background in covering the cryptocurrency scene as a journalist, and more recently as a member of the Hullcoin team, I was interested to see what business minds were thinking when it came to FinTech (which is the latest buzz term for Financial Technology), my perspective on things is much more from a tech angle, so I saw this as an opportunity to learn more about the business aspect of this space.

As full disclosure,This day was made possible by Dell UK, but all thoughts are my own.

It was clear from this event that there is, at least, a lot of effort and good intention surrounding the development of FinTech in the UK. Katherine Braddick (Director of financial services, HM Treasury), actually said that there is a target for the UK to be the go to country for FinTech startups. This would be interesting as there is already a thriving UK startup scene, in both the north and south of the country. The north of the UK, which I’m most familiar with, has organisations like KeyFund, the dotForge accelerator, and the Northern Stars startup network.

The most curious thing about the event, to me, was the strange way that blockchain technology was addressed – it was a white elephant in the room. Only one panelist in the event was an expert in the field – Eddy Travia of Coinsillium. In his talk, he highlighted the bad press that bitcoin has received, which has resulted in a movement away from Bitcoin itself, and to more general applications of blockchain technology. He’s right on both counts, and this is the way I saw Bitcoin going over three years ago. I found it frustrating listening to Travia because there was so much more he could have said, but because Blockchains are still so poorly understood, he had to tailor his message to the audience and avoid going into technical detail.

For me, as someone who does understand blockchains, it was frustrating to hear the only blockchain expert have to speak in terms that, while technically correct, didn’t really help anyone. There were multiple times when he answered questions, and I knew what he was alluding to (such as questions about the mining process), but I also knew that the asker in the audience wouldn’t go away with any further understanding on the subject. This wasn’t his fault per se – it’s a difficult subject and understandably the type of people at this event are too busy and consumed in their current duties to take the time to understand why blockchains are so important.

It was also interesting to observe the dichotomy between the level of interest and understanding in technology by the business people attending the event came thanks to Emma Cheshire, CEO of the dotForge tech startup accelerator. As a panelist, she took the unconventional step of asking the audience a question. “How many of you are actively engaging with technical innovation?”, she asked. When I looked around and saw hardly anyone raising their hand. In a room of nearly 200 people, I recall seeing less than five hands raised.

Confusingly, other panelists at the talk highlighted how much R&D money was going into FinTech. A speaker from Ernst and Young stated that a survey it had carried out indicated that around twelve billion dollars was invested in 2015. Furthermore, HM Treasury said it has seen a 136% increase in FinTech investment during 2014.

During the whole event, there were many statistics touted that would cause investors to salivate over getting into this space. Here are a few: Tony Craddock of the Emerging Payments Association said that the volume of small transactions carried out by contactless payment methods (e.g. RFID debit cards and Apple Pay, etc) had gone up from 3.9% to 10%. Richard Carter, Chief Exec of the Nostrum Group, stated that StarBucks’ revenue had increased 11% 2015 due to payments made through its mobile application.

These and other statistics, again from Ernst and Young, show that as far as consumers are concerned, convenience drives adoption and that cost and trust levels are not as important.

All in all, it’s no wonder that investment into FinTech is on such a rise. However, I dismayed at the relative lack of understanding of the technical side of the field by the people who are looking to invest in, or take advantage of, the financial technology currently on offer.

As Marc Andreessen famously wrote, software is eating the world. You need to have a solid understanding of technology to be able navigating the brave new world we find ourselves in. I came away from the Future of FinTech feeling that there is still an intellectual gulf between business experts and technology experts. Hopefully, we can all start to learn from each other and develop a greater overlaps in our skill sets.