Opening Up The Banks

It was a FinTech-tastic week in Edinburgh last week as – hot on the heels of the Bitcoin Meetup with Colu and the FinTech Scotland Conference – the Hack/Make The Bank hackathon took place, run by the hugely friendly team at the Open Bank Project. Well over 120 hackers and enthusiasts piled into the RBS Technology Solutions Centre in the New Town to build innovative ideas on top of the Open Bank API.

Open Bank Project Hackathon Visualisation
Hack/Make The Bank Hackathon, Edinburgh (9th to 11th October 2015)

The concept of open bank data is pretty much a no-brainer once you start to think about the implications. Providing free, standardised access to the banks in real time liberates developers, entrepreneurs and – most importantly – consumers around the world who are otherwise hampered by legacy technology deployed by financial institutions.

The team from TESOBE did a sterling job over the weekend leaving no stone unturned in their quest to create the ideal environment for those burning the midnight oil, providing a selection of massages, whisky and bagpipe accompaniment (!) in addition to the obligatory Red Bull, food and support throughout.

Ismail Chaib introducing the Hackathon
Ismail Chaib (Open Bank Project) introducing the Hackathon Prizes

I was delighted to be asked to act as a mentor at the event. It’s something that I’ve done at a few times at a number of hackathons (in different capacities) and it’s always an honour. I’m always full of admiration for anyone who chooses to come together to work – hard – over a weekend out of choice out of a simple desire to create and build something new and worthwhile.

The final pitches were great. As usual, I’m not going to share the ideas here (it’s not clear yet who wants to go forwards with these). Needless to say I was happy to see the guys from miiCard bring home the prizes for most disruptive (believe it or not, I had no say in the judging!)

All together, big congratulations go to Ismail Chaib, Simon Redfern and the rest of the Open Bank Project team; Kirsten Bennie and the rest of the RBS team who are clearly engaging positively with the upcoming disruption that’s undeniably en route; and last, but not least, all the developers and disruptors who proved that Scotland is now starting to really build on a burgeoning FinTech reputation.

Can’t wait for the next one.

Hackathon Collage


Reflections on MoneyConf 2015

The organisers of the WebSummit got in touch a few weeks ago and asked me to head across to Belfast for a couple of days to chair a couple of panels at their new event MoneyConf last week. It was a great gathering of some of the big names in FinTech and it was striking just how predominant Bitcoin and/or blockchain businesses were in the conference programming.

MoneyConf 2015
My MoneyConf Panel on 16th June 2015 with Stephen Pair (BitPay), Naveed Sherwani (PeerNova), Matthieu Riou (BlockCypher)

Whilst I’ve spoken increasingly frequently in public on Bitcoin over the past couple of years or so and compered/organised the Scottish Bitcoin Conference, this was actually the first time I’ve chaired panel sessions. I wasn’t too sure of what to expect (how opinionated should you be as the chair, what to do if someone talks too much or – worse – too little etc). However, I’m happy to say that it was a blast. Both panels seemed to go down well and I’m eager to do it all over again just as soon as possible.

My MoneyConf Panel on 15th June 2015 with Damian Kimmelman (Duedil), Anil Stocker (MarketInvoice) & Hiroki Takeuchi (GoCardless)
My MoneyConf Panel on 15th June 2015 with Damian Kimmelman (Duedil), Anil Stocker (MarketInvoice) & Hiroki Takeuchi (GoCardless)

Panel MoneyConfAccording to research carried out by Goldman Sachs, 33% of millennials don’t think that they’ll need a bank in the next 5 years.

Nic Cary,, MoneyConf, Belfast, June 2015
Nic Cary,, MoneyConf, Belfast, June 2015

And, as Nic Cary pointed out, any financial institution that does not have a blockchain strategy discussion of sorts taking place in its boardroom at present is not a business that’s likely to be around in a few years’ time.

It was fascinating to hear Halsey Minor of BitReserve in conversation with Max Keiser (here’s another conversation if they’ve had since). For those of you who aren’t aware, Halsey is – there’s no other words for it – a serious player. When someone who helped to create not one but two billion dollar businesses (CNET and Salesforce)  says that the announcements that he has planned for the next few months about the evolution of BitReserve are by far the most disruptive of his entire career – take note.

One final note: Adam Ludwin of Chain and Vinny Lingham of Gyft announced a ridiculously cool collaboration in the form of blockchain-powered gift cards. I’ve just found the video here of the presentation here as well if you’re interested. So all in all, a great couple of days in Belfast. If I had to find fault with anything, it was the lack of Bitcoin ATM’s…. but you can’t have everything 😉 I for one will be heading back next year to see how the event grows that’s for sure  

Panel1 Day 2

Why Banks Can’t Innovate

It’s a common rule of thumb in business that the bigger the organisation, the harder it is to innovate. Unable to foresee, or respond quickly to the changes that inevitably occur, groupthink and decision by committee become the default modus operandi.

Nowhere is this more prevalent than in large, entrenched and heavily regulated industries and particularly those that, quite literally in many cases, have a licence to print money. Hence the rapid growth in FinTech.

I read an excellent post by Simon Taylor today which gives a valuable explanation of precisely why this happens. In short, these organisations suffer from the curse of over-thinking every possibility when there are simply too many variables for anyone to come up with a definitive forecast of what lies ahead.

With such analysis paralysis, decision making is slowed down to a speed that’s often ineffective competitively. They find themselves in a difficult position. There are so many increasingly complex areas within any financial business that operates at scale (such as cybersecurity or regulatory compliance) that the management is unable make any decisions without the input of a vast array of specialists in each area. As such expert findings are reported back, they are invariably challenged and subsequently diluted by those who invariably know less about the area in question.

The reality is that you can’t blaze a trail when you’re left with nothing but compromises to implement.

And this is exactly why VC’s are currently getting so excited about FinTech. If you’re looking for investments that have the potential to provide above-average returns, why not start by focusing on new businesses that will disrupt huge, slow incumbent businesses that are becoming increasingly ill-equipped to deal with the advance of both technology and societal change with each passing day. As Simon points out, Alibaba, Amazon, Tencent and Facebook all have banking licences. How can the old guard possibly defend themselves?

Perhaps one route is fpr them to simply accept how ill-equipped they are to pursue innovation. Instead they should adopt any of a number of alternative approaches to seeking out that elusive competitive advantage in the coming shakedown. Simon’s suggestions for strategies that could be adopted are as follows:-

  1. Buy innovative businesses – simply buy the result that you need (hence the current prevalence of financial support for incubators, accelerators etc.)
  2. Launch/acquire a Challenger Brand – create a popular standalone entity that is unburdened by the underwhelming public image of its creator.
  3. Adopt the mentality of a technology company – let’s be blunt: older people are less likely to understand how younger people want to access financial services than those of a younger demographic. And structured software development methods will drive innovation.
  4. Really understand how users view your product – rather than paying lip service to the principle, incorporate modern digital and product feedback loops.
  5. Let smaller, autonomous teams make decisions – a phrase likely to strike fear into the heart of any regulator.
  6. Fail more frequently – fail fast and learn from your mistakes.

I can’t imagine that anyone would argue that the sixth suggestion in particular must be the one that scares the pants off the banks. In such a heavily legislated sector such as banking (and – topic for another day – Law), there is a complete lack of understanding about the value of learning from failure. Not great. Risk aversion is poison to innovation.

There’s a clear overall message here. The reality is that just like the proverbial oil tanker, the current financial institutions lack both the culture and the capability to really turn at any useful speed in order to adapt to developments in the wider ecosystem. Given the fact that there will inevitably be another financial crisis (perhaps sooner rather than later), it’s hardly surprising that VC’s and entrepreneurs have identified (whether via Bitcoin or the wider FinTech movement in general) that time’s running out for us to drive innovation in this crucial area.

Unlike with consumer tech where innovation may be successful without being universally adopted (I love Twitter but how many of our parents can honestly say it’s changed their lives?), an improvement in the financial machinery of our economies is essential given the extent to which every single one is so increasingly intertwined across local, national and international locations.

Because, as JP Morgan’s Jamie Dimon was heard to say after the 2008 financial meltdown:

“My daughter called me from school one day and said, ‘Dad, what’s a financial crisis?’ And without trying to be funny, I said, ‘It’s something that happens every five to seven years.’