FinTech - Filling The Void

A recent panel during London FinTech Week highlighted how FinTechs are filling the void created by banks moving away from running large infrastructure projects themselves.

The panel was moderated by Jon Vollemaere, CEO of R5, and included Steve Toland (TransFICC), Luke Waddington (BNP Paribas), Andy Woolmer (New Change FX), Amine Berraoui (Tramonex) and Paresh Davdra (RationalFX).

The main theme discussed by the panel was that banks are now more likely to pick and choose which technology projects they run in-house and which to outsource. Traditionally banks have sought competitive advantage from building their own IT services, but it is now the case that banks are no longer trying to manage IT projects themselves. Instead they are now much more inclined to use a range of FinTechs, consultants and in-house resources.

The emergence of FinTech as an industry, with access to funding, has enabled start-ups to find a niche and use technology as an enabler. This in itself means more fragmentation, with far more trading venues and technology providers. Technology providers are now able to develop specific services, often modularised, and banks can choose the most appropriate components parts, often from a variety of FinTechs.

The panel also discussed funding. Organisations which target banks as clients are often faced with the decision of whether or not to accept funding from one specific bank. Many banks are interested in investing in FinTechs, particularly if the FinTech in question provides them with a service that they need. However, the panel agreed that it is essential for FinTechs in the capital markets industry to have to have a degree of independence, otherwise other (competitor) banks are unlikely to use their services.

One of the panellists put it succinctly. “If one bank buys a marketplace the other banks won’t want to play”

As FinTech Week was in held in London it is unsurprising that Brexit was also on the agenda. Two important points were made about Brexit and EU regulation: most banks operate in multiple jurisdictions, not just the UK, and MiFID II comes into law before the UK plans to leave the EU. The bottom line is that there was little doubt amongst the panellists that Brexit will have no impact on upcoming EU Capital Markets’ regulations. Banks must comply.....with a helping hand from some of the FinTechs out there.

Click here for more information on London FinTech Week - https://fintechweek.com