CMOS Will Shape the Future of Finance in 2021

Why CMOs Will Shape the Future of Finance:

This month, experts from both sides of the Atlantic are hosting our FinTech FaceOff event and discussing the direction of finance. Their views may be mixed, but their premise is probably the same: the hype about the role of technology in finance is over.

In the course of LinkedIn’s groundbreaking three-year World Fintech campaign, excitement has arisen among concerned financial technology companies.

Technology can still advance the future of finance, but only if it meets the needs of the customer. And that puts the role of CMO at the core of the successful providers of tomorrow.

The strike of Fintechs in secret

Even when the excitement wears off, some fintech players keep their promise, but not always as they or we initially expected.

First, fintechs are getting bigger and faster. The British bank Monzo and N26 is a unique German app and now has more than half a million customers each. The Venmo app, created by two roommates to take revenge, grossed $ 8 billion in the second quarter of 2017.

Few of these participants are willing to provide basic banking services. But by concentrating on simpler items such as payments, they secretly upset established banks.

As McKinsey & Co. noted, these new platform companies are increasingly dominating the ‘distribution’ of banking sector origins and sales, which account for 65% of bank profits.

Fintechs is starting to add new services according to the needs of the customer. The mobile payment platform Stripe, founded by two Irish brothers to get rid of e-commerce, now offers new services such as automated payment reconciliation for small businesses. Sofi, which started offering student loans in 2011, now also has a thriving mortgage service.

Meanwhile, struggling fintech companies are working with big players. Bud’s founders wanted financial programs to work better together; the company was just two years old when it signed an agreement to help HSBC launch an integrated funding program, linking customer accounts from multiple providers.

Big Tech is here (but they do not want to be banks)

Of course, the tech giants have already penetrated the banking world – see Apple Pay and Google Wallet. Amazon Lending offers commercial loans to its merchants, and Facebook Messenger users can make payments to each other via the app.

However, none of them are planning to become a full-fledged banks. Amazon may have met with bank regulators several times, but Jeff Bezos does not want to comply with the US Treasury’s law on banking regulation, the OCC.

“It will only hurt our innovation,” Apple founder Steve Wozniak said during the Money20/20 event. “We just want to go to the banks.”

Where these businesses work best, it’s a seamless customer experience, like Apple Pay with credit cards. Uber and Barclays are trying a similar trick with their Uber card: the reason is that customers do not have to think about payments; they just have to happen.

Curt Hess, CEO of Barclaycard US, says it’s about eliminating friction. And he is confident that the Uber card will appeal to a larger audience than millennials alone.

There is wind from the east of Komt

In the financial world, we can reverse the aphorism “first the west, then the rest”. The United States, for example, is far behind the world in contactless payments. In Australia, 92% of face-to-face Visa transactions are contactless. In Taiwan this is 44%; in the United States, it is 0.6%.

The Alipay ecosystem, which includes China’s largest e-commerce sites Taobao and Tmall, is known for dominating the country for $50 billion in mobile payments. Of course, Chinese innovation in fintech should not be rejected.

Consider Japan’s Rakuten, whose CEO, Hiroshi “Mickey” Mikitani, has been talking about the platform’s ecosystem strategy since the platform’s inception 20 years ago. Today, Rakuten Card is about to weaken traditional providers and become Japan’s largest credit card company.

Rakuten’s success is linked to its status as the largest retail market in Japan, as well as the use of loyalty points and e-money in hundreds of thousands of stores. It also runs the popular instant messaging app, Viber.

This is not just an oriental phenomenon. Banks around the world need to be aware of the rise of digital finance platforms and the ecosystems they create.

Import Word Platforms

There are many containers in the suitcase. We see that various banks are rediscovering themselves as a platform.

In some cases, the market forced them into action. ING Netherlands, one of Europe’s largest banks, has partnerships with hundreds of fintechs and now focuses almost all of its investments in digital. It grows to 1.5 million customers per year.

Santander OpenBank, on the other hand, started again last year as a digital bank, looks like fintech, but believes “you have to be good, otherwise we build it ourselves”. It has more than 1 million customers in Spain and a huge ambition to expand.

Its CEO, Ezequiel Szafir, has compared banks that don’t embrace digital to captains who ignore their sinking ships. “I’m in charge of the conference room and many faces resemble the Titanic Orchestra.”

The positive case is just as convincing as the negative case. The more users a platform has, the more valuable it becomes, emphasizes Ezequiel. It’s a vicious circle: a business model where the winner takes everything into account.

Why focus on the CMO?

The Fiserv revolution is an opportunity for all CMOS. The key to success is to focus on the customer experience and not get distracted by technology.

It’s not about fintech anymore. The word also feels old-fashioned, as many of the interviews with LinkedIn’s change agents suggested.

“The future of finance is not technology. It’s about being on the consumer’s side,” said Harit Talwar, head of Marcus through Goldman Sachs. Financial blogger Chris Skinner agrees, “The winners won’t be the ones with the best technology, but the best value exchanges.”

It concludes that the CMO should sit on the board to set the strategy for what we can now call good service. Those who are still mainly on the technological side ignore the customer’s focus on their own danger.

The question is whether the current GMOs for financial services are up to this new challenge and are also aware of the fundamental tasks ahead.

Join us on Tuesday, February 27, to explore these issues online at FinTech FaceOff. Capgemini and LinkedIn, in partnership with 11:FS, bring together key financial services influencers from the US and Europe in a debate and you can vote on the most compelling predictions for the future.

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