Nicholas Negroponte wrote the book in 1995. We’re still on the journey of digital transformation, and in some areas, notably B2B payments, it seems like the directions are fuzzy and the map unclear. How will banks and corporations find their way through the paper woods and organizational swamp? Will digital FinTech grow into the beast that ate the traditional bank or become the docile pet? Take a look at this week’s articles for some debates on the road ahead.
The Association for Financial Professionals takes a look at the seemingly endless trudge from paper to electronic B2B payments, an area that most desperately need help. FinTech directions lead to consumer destinations first, and this piece gives some of the reasons why. Yet the elimination of paper in financial services is moving forward, as the International Swaps and Derivatives Association (ISDA) last week published v5.8 of its Financial Products Markup Language guidelines, which drive automated securities processing.
A trio of articles takes on the frustrations and opportunities of digital transition in finance. With new apps setting the standard for a seamless, fast, integrated service and response model, customers are said to have increasingly less patience with the slow, siloed, outdated communication of banks and larger financial firms in general. McKinsey gives a high-level look in “Going Digital.”
Chris Skinner, writing here for BAI Banking Strategies, takes aim at the difficulties of digital transformation in banking, suggesting many banks may just start from scratch and start new digital banking organizations. “They’re thinking about digital as a channel. . . It’s not a channel or a function.” It’s the core of a new bank.
For a real-world look at going digital at State Farm Insurance, see The Financial Brand’s review of a frustrating (and depressingly common) insurance claim experience in “6 Ways Companies Fail at Digital Customer Service.”
In his own blog, Skinner provides an entertain overview (with links) of a recent New York debate, “This House Believes Fintech Will Eat The Bankers Lunch.” The rebellious FinTech startups did not come out on top in the end. As Skinner writes, “The Start-ups may win the battle but there won’t be a war. Just a symbiotic special relationship.”
No, this is not from this week, but it came to mind as an excellent—if biting—argument against the FinTech hype from Dan Davies, senior research advisor at Frontline Analysts. Here, he reviews what’s overlooked in seven FinTech business models.
Dodd-Frank Turns 5 as the Volcker Rule Goes in Effect
The rebel startups do tend to overlook the force of regulation in financial services. The industry was reminded of that part of the digital journey as the Dodd-Frank Act turned five. See The Wall Street Journal’s article on the impact of landmark regulation, its difficult road to rulemaking, and what’s left to be done. Dodd-Frank also reached a major milestone this week, with implementation of the Volcker Rule, 165 word limiting proprietary trading by banks that ran into reams of rules and counter-rules, “an 891-page preamble leading to a 71-page rule,” as The Economist reports in “Much Ado About Trading.”
So much for preserving the woods.