The Rise of Fintech and Banking Disruption

What is Being Disrupted in Banking?

Frankfurt after sunset

We recently have been honoured to be announced as a Finalist in the FS Tech Awards as the “Most Disruptive Financial Sector Technology”.

While we are delighted with this industry recognition for our work, it’s also led, around the proverbial water cooler, to us discussing what is it that is really being disrupted and what is Mambu’s role in that disruption. In reality, we think what we’re seeing is a convergence of two disruptions: both in banking and in technology.

On the technology side the big market shifts are clear. We’ve seen seen CRM move to the cloud, we’ve seen ERP move to the cloud and we’ve seen the rapid adoption of SaaS over in-house or ASP models in most industries except for banking until this point. There is a clear and significant change that we are witnessing now, you only have to look at the announcements from institutions and regulators made in the last six months to see the increasing uptake of cloud technology.

In such a heavily regulated and IT-dependant sector, it’s not surprising it’s taken a while for banking to catch up, but we believe we are on the cusp of an extremely exciting time in this space.

You can talk about reinventing branch banking, or about the future of cash versus other currencies. You can talk about the role of banks in e-payments or m-payments or any other kind of payments. You can talk about service innovation or advanced analytics or social networks or viral marketing, or incorporating the voice of the employee and the consumer. But in each case what you’re really talking about—the trend behind most coming challenges and opportunities for banks — is digital disruption. @banktech

Organizations like to talk about innovation but at the end of the day, ultimately, investment in innovation is often driven by necessity or fear and this is true in banking technology as much as in any other sector, if not more so, as ultimately the price of failure is high.

Necessity comes from the ever-rising cost structures of internal systems and the inability to keep up with new competitors and maintain market share, and fear comes from the threat of agile new competitors and the inability to support major shifts in consumer expectations for a whole new online and mobile customer experience.

To us, this implies a fundamental shift in values. Speed, agility, simplicity and affordability are taking top billing. Not words commonly associated with complex banking systems, but today, these attributes are being enabled for the first time in banking by the power of the off-the-shelf solution approach, the security and the scalability that cloud technology and the service-based business models supporting it offer.

We class many of our customers as banking disruptors. Genuine financial innovators, unafraid to approach banking services from new angles, they are rethinking what banking should and could be, to whom it should be available and how these services should be managed. These organizations include:

  • Banks who want to launch new products quickly, while dramatically lowering the financial burden and physical time it takes, for their customers to access loans and deposits.
  • Startups and other financial innovators who see the opportunity, enabled by new technology, to make credit assessments workable and profitable, for previously unreachable markets.
  • And microfinance organizations, the original financial services innovators who pioneered invaluable basic banking services to the base of the economic pyramid and are seeking to increase outreach, measure their societal impact and do more for their local communities.

Enabled by new technologies, these innovators are gathering pace, and collectively causing a shift from the old way of doing things to a newer, more nimble dynamic across the sector.

Few industries have seen such a double-impact shift occurring in parallel and we believe it’s a key reason why it could happen faster in banking that many would expect.

It’s an exciting time of change, of innovation and of rapid maneuverability to meet evolving market realities.