Digital transformation of incumbent banks is accelerating while FinTech collaboration is increasing. Read our report and thoughts from Money20/20 Europe where we went for scouting FinTech market and the latest trends in banking industry.

Amsterdam went crazy when the Greatest FinTech Show on Earth landed the city on June 4-6, 2018. More than five thousand attendees from 85 different countries enjoyed over 90 hours of content from 400+ speakers – besides the enormous networking opportunities. BearingPoint was also there to scout the latest industry trends and fintechs, and to meet people.

RAI Amsterdam conference hall was decorated as one big circus with eight audiovisually magnificent stages and carefully produced programs on each. In addition to many leading banks and FinTechs we saw The Woz, Steve Wozniak of Apple on the main stage. Also, other BigTech companies including Alipay, WeChat Pay and Amazon Pay showed off their muscles during the three days.

Are you ready for Open Banking?

There seems to be a great consensus within the industry that Open Banking is the way forward. Customers’ expectations on digital services and the ever-accelerating pace of development cycles forces incumbent banks to open up and banking business models to transfer to support digital ecosystems. According to presentations and talks at Money20/20, incumbent banks seem to be ready to adapt. There is plenty of enabling technology available for banks and FinTechs are no longer seen as a threat but as partners to collaborate with in order to accelerate the ability to innovate. Importance of data has been understood and everyone seem to be talking about smart assistants and other clever ways to leverage data to serve customers better. Sebastian Siemiatkowski of Klarna wrapped up the hottest topics by saying, “the winners will develop open platforms that act as assistants”.

The industry is now moving from open banking showcases to concrete business propositions. Only a little while ago seminars like this introduced sandboxes which banks’ are opening and banks’ plans for FinTech collaboration. Now, the focus seems to be more on real-life initiatives. As an example, ING announced that it will build an open campus, where banks, FinTechs, universities and other relevant parties can collaborate creating a seedbed for new types of ecosystems to grow up.

On day two the attendees voted Open Banking as the most interested topic so far

The end of the FinTech Disruption as we know it?

The king of the FinTech hill was Revolut – at least if measured by hustle and bustle around and talks about. Starting from foreign exchange payments they have expanded towards a universal digital financial services provider and have convinced the industry with their 1.5 million users. One of the key success factors seem to be their very clear target group (urban young adults who travel a lot). Next, Revolut seems to be moving to business banking where they have already managed to acquire 60 thousand customers.

Revolut is one of the neobanks who are challenging incumbent banks with bold actions and digital agility. The challengers keep incumbent banks busy and dig their spurs in digital business development. However, the majority of FinTechs seem to have pivoted their initial strategy from B2C to B2B and are aiming to collaborate with the incumbent banks. Many Fintech startups have found it hard to acquire trust and high number of customers required to succeed in B2C business. Therefore, many have selected to partner up with banks instead of head-to-head competition. Hence, FinTech disruption may eventually hit more on traditional banking technology providers than banks themselves.

Big wheels keep on turning

While the collaboration between banks and FinTechs is evolving, the center of gravity in banking disruption is turning towards BigTechs. Chinese super-apps (Alipay and WeChat) as well as GAFA’s (Google, Apple, Facebook and Amazon) have everything the smaller FinTechs are lacking: customers and capital. And in certain segments and markets they might already be more trustworthy than some banks. So, they could take over banking if they wish. When asked about Apple’s strategy in payments, Steve Wozniak answered that a bank’s purpose is to safeguard people’s money while Apple’s purpose is to make people’s lives easier. Purpose is the keyword here: BigTech companies will expand their role in banking if it fits in their purpose.

Many BigTechs are already in banking, mainly in payments so far. Alipay and WeChat Pay together have more than 1.6 billion active users per month, and they both have already expanded outside China. Both serve Chinese tourists today in 40 countries worldwide. In addition, Ant Financial, the FinTech behind Alipay, has partnered with local e-wallet providers in ten different countries in South-East Asia. It might be just a matter of time when Ant Financial or Tencent (the owner of WeChat) packed super-apps will be available for consumers also in Western markets with some local twist relevant for Western consumers.

Our key take-away: Differentiation still matters

Banking industry’s evolution towards digital ecosystems is accelerating. New launces and announcements are seen almost on a daily basis and it is very easy to jump into the hype. The biggest race today seems to be in smart assistants. Most probably that is the way how banking customers will be served in the near future. But will rushing into that or some other new technology give the forerunners only temporary head start? In order to create a sustainable competitive advantage all players – whether big or small, new or incumbent, local or global – must understand their purpose; who are they serving and why. Write your own playbook, don’t get confused about your competitors’ announcements, and be ready to pivot based on learnings from your customers.

How do you see banking market and FinTech disruption to evolve over time, and what it takes to succeed? Please feel free to leave your thoughts in comments.


Jani Ristimäki, Manager, Digital & Strategy
Antti Maunula, Senior Manager, Digital & Strategy