Fintechs don't realise own arrogance, says Paul Steenkamp (Standard Bank)
"Banks need to become less self-obsessed and more aware that all the decisions they make have to have customers at the centre," says Paul Steenkamp, Head: Innovation Capability at the Standard Bank Group. Paul was on the panel during the successful 2nd FinTech Africa event in Johannesburg. In the lead up to our 3rd event in Cape Town on 20 OctoberEbrahim Moolla spoke to him about the panic banks felt about FinTech and the way they are starting to embrace the revolution now. "One plus one equals three. Banks and FinTech companies can achieve a lot more by working together."
- Join our FinTech Africa event in Cape Town on 20 October
- Meet South Africa's FinTech rock star, Tobie van Zyl
- Read an interview with IDM's COO Benay Sager
- Find out what investor Colin Vallis thinks about FinTech in Africa
- Learn about FinTech accelerator Techstars and its program in Cape Town
- Get an international perspective from Nicole Anderson
Tell us about your background.
"I've got a background in industrial psychology and an MBA and have been involved in driving culture change in big organisations, particularly in financial services, over the past 10 years. I spent five years at FNB, running the innovation programme, and joined Standard Bank last year to build innovation capability. We are pursuing an open innovation strategy that involves partnering with FinTech companies to solve very specific business challenges."
"Fintechs are very quick to accuse banks of being arrogant, but they don't realise their own arrogance."
It's been said that you hang your degree certificates in the guest toilet. How important is financial education for the entrepreneur?
"It is hugely important to be part of a learning organisation and, on an individual level, to believe in lifelong learning, remaining curious and making space in your mind for new things. I refer to a degree certificate as a slip of paper because I believe formal education is driven by people's insecurities and the belief that a degree somehow makes them better than others. An MBA is an exercise in persistence and resilience, rather than a title that marks the holder out as someone special."
What is driving the FinTech boom?
"One of the drivers is the extent to which banks are regulated and that banks have been conservative in the wake of the 2008 global financial crisis. There are exceptions, but there is evidence to suggest that they have tied themselves in knots in trying to comply with new, more stringent regulations. This has resulted in them being more internally focused and less responsive. Another contributing factor is that customer experience expectations have changed radically over the past few years."
What is the big bank perspective on the FinTech revolution?
"A year ago there was panic in parts of the global banking industry and some people were really rattled. Lots of banking presentations used slides with Bill Gates' famous quote: "The world needs banking, but it doesn't need banks." There was a lot of fear mongering over the rate of proliferation of FinTech companies and how much money was being invested in them. Things have changed and there is now recognition that banks have brands and scale. The reality is that the scale and reach of big banks are incredibly valuable. FinTech startups, on the other hand, have agility and capabilities that banks don't have. When you bring these things together, one plus one equals three. Banks and FinTech companies can achieve a lot more by working together."
What can banks do to stay relevant?
"Banks need to become less self-obsessed and more aware that all the decisions they make have to have customers at the centre. The "my way or the highway" days are very much gone. The problem is that there are a lot of legacies in banks, because they have been built with a product mindset. There are also new ways of working that banks need to embrace and move away from silos and hierarchies. Companies are having a lot of success by using small, multidisciplinary teams who employ innovation accounting metrics and big data to keep themselves honest around their investments, challenges and opportunities. Lean, agile and continuous development processes also need to be infused and adopted."
"The challenge for FinTech entrepreneurs, especially those who have come out of financial services, is that they need to focus on solving problems instead of developing products."
Are there any FinTech companies that have impressed you?
"We developed our SnapScan product with a Stellenbosch-based FinTech group called FireID. We loved working with them, but I don't think the feeling was mutual. There's clearly been something in it for them to go through the pain of working with us. We've learnt a lot on how to partner with Fintechs, which is innovation in its own right for our sector and our customers. Our partnership with FireID has been inspiring and they've helped demystify a lot of topics for us. They are head and shoulders above their peers. We've also engaged the local and international FinTech community extensively through our sponsorship of the Matchi.biz forum."
What are some of the misconceptions FinTech companies have about banks?
"They often feel that banks absolutely need their solutions, when this is seldom the case. Often, the bank has actually developed and launched a similar solution years ago, but it just didn't work for some reason. Fintechs are very quick to accuse banks of being arrogant, but they don't realise their own arrogance. They think people in banks are stupid and haven't thought of the obvious. We are not going to fall over ourselves to adopt their solutions. Partnerships work better when we have a specific challenge that we need to solve and this involves community-building and regular engagement. As banks, we have to be open with our laundry list of stuff of things we needed to solve, leaving some space for wildcards."
Do you have any advice for entrepreneurs in the space?
"I really admire FinTech entrepreneurs. It is important that they remain committed to their businesses and be willing to continually iterate or kill solutions they've come up with. I've seen Fintechs go under because they keep flogging a dead horse."
"Many successful FinTech businesses, including FireID, hold on to their ideas lightly and are not afraid to kill them. They have a wonderful objectivity and metric-driven decision-making process and don't get emotional about things. The challenge for FinTech entrepreneurs, especially those who have come out of financial services, is that they need to focus on solving problems instead of developing products."
- Join the FinTech Africa Event 'The future of investing in FinTech in Africa' on 20 October 2015 in Bellville, Cape Town. RSVP now here or contact us on [email protected] or +27 11 0837515.
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