No one has yet managed to "flip the table" because of the enormous barrier to entry that the creation of a "real" bank requires. With a lot of cash, will Fintech manage to break into the banks' vaults? By Pierre-Antoine Dusoulier, founder of iBanFirst.
Aas Orange Bank has just announced its launch date, a UBS investigation reveals that 48% of the French now access their banking services via their mobile phone, an increase of 50% in one year. The use of mobile payment is also growing (+3%). Taking advantage of recent technological advances in the Cloud, Big Data and artificial intelligence, of a certain disaffection of users towards traditional banks and of the evolution of regulations favourable to the opening up of banking information systems, Fintechs are gradually making their presence felt in the daily lives of individuals and companies alike.
Fintech regulated vs. marketing approaches
But banking is not a job like any other. On the one hand, the increasing weight of regulations makes a bank, even a "neo" one, a much more complex business than any online business. On the other hand, its financial stakes are out of all proportion to those of most startups. In addition, the bank controls the risks that the traditional entrepreneur must necessarily take to succeed. Finally, the long-term vision of one is opposed to the immediate action of the other.
In my opinion, two categories of Fintech currently coexist. On the one hand, the regulated companies that have developed a true business model. This meant building a team with highly specialized skills, taking particular care to comply with regulatory constraints. On the other hand, there are companies whose strategy is exclusively dedicated to the acquisition of clients, in order to enhance their value to investors, particularly banks. The former are positioned in head-on competition with banks and naturally exclude any acquisition of a stake by a banking player (except when they have no other choice to continue their activities), while the latter brandish the banner of "cooperation" to encourage a takeover or majority stake.
Knock over the counter?
Whatever the amount of the valuation, the dynamism of this market attracts covetousness. As I am regularly approached by entrepreneurs wishing to develop their Fintech, I am struck by their lack of knowledge of the market. Like most startups, their main driving force is dissatisfaction, in this case with their own bank. They therefore turn the problem upside down and seek to improve this or that aspect of the banking relationship at all costs, postponing organisational, compliance and profitability issues until later.
My first reaction is rather negative. Do they really think they will succeed in a few months where others have been struggling for years to change regulations, investing heavily to obtain approvals and build teams of experts? Secondly, I wonder... Have I aged? Are new models of investment and entrepreneurship emerging? The case of Elon Musk is significant. His ideas seem, at first, a little crazy, but in the end, they work. Disrupting the space sector? Revolutionizing mobility? Impossible at first glance, especially in sectors that are at the cutting edge of R&D and highly regulated. Musk will certainly have been inspired by the work of Clayton Christensen, author of the "The Spaceman". The Innovator's Gene: Five Skills that Make a Difference".on a company's ability to Focusing on new customer expectations.
Breaking into bank safes
In the banking world, although the Fintechs have nibbled away at some market share, no major disruption has occurred since the advent of online banking. No one has yet managed to "flip the table" because of the huge barrier to entry that the creation of a "real" bank requires. With a lot of cash, maybe we'll be able to break through the banks' vaults? The question remains unanswered as Orange joins other digital players in the race for the shallot.
For the time being, the revenues of investment funds and venture capitalists have not proved their worth in the banking world. Yet they are the basis of the success of Amazon, AirBnB, Tesla, Uber. Today, given the very varied specificities of the various banking businesses, the simple desire to "simplify" processes does not make a company. If the capital increase is a known recipe in the e-commerce field to compensate for losses, can we reasonably imagine applying it in the banking ecosystem? The Japanese telecom operator Softbank recently threw a paving stone in the pond by building a $100 billion technology fund, including banking. A milestone has been reached. The idea certainly seems a bit crazy, but that is why it would be better never to say never.