Published on in Financial ServicesDigital Transformation

Whenever I attend industry events I’m always excited to learn what’s new in financial services and share my own knowledge. Fujitsu Forum 2017 was no different.

From some heated debate about whether fintechs are threats or potential partners to the rise of the digital workplace in banking, there was plenty to get you thinking.

And yes, blockchain did get a mention (or several).

Here are some of my highlights from the event…

How should incumbents approach fintech?

Fintech is like the enfant terrible of banking and IT.

The worry for most incumbents in these sectors is that fintech could prove disruptive, with established retail banks, for instance, at risk of being replaced by peer-to-peer lending apps.

This precarious situation provided the focus for the ‘Fintechs: threat or partner?’ session.

Take a look at the slides from the fintech breakout session here:

Our expert presenters, Fujitsu’s Latif Ajouaoui and Matthias Lais, Founder and COO of Main Incubator, a European fintech incubator and subsidiary of Commerzbank, made it clear from the offset that the power of fintech is undeniable.

Fintech companies “identify trends, set trends and participate in trends,” said Matthias Lais, Founder and COO of Main Incubator.

This makes fintech very dangerous as a competitor – but incredibly useful as an ally.

In this capacity, fintech can help make up for the agility and creativity that big corporations often lack.

Matthias made another interesting point about the fact that people are excited about fintech.

Global investment in fintech in 2016, for instance, roughly amounted to $24.7 billion.

A good deal of this investment already comes from current leading banks – according to Main Incubator’s information (which is focused on Germany, where the company is based) 87% of surveyed banks are currently active in fintech.

In fact, Main Incubator itself is a great example of a bank engaging with fintech. Commerzbank, a banking and financial services company that’s approaching its 150th birthday, is Main Incubator’s anchor investor and long-term strategic partner.

So, when Matthias concluded that fintechs represent “a promising chance” for large financial services organisations, it’s probably fair to say that this was an understatement.

Fintechs have already proven themselves to be a partner for big banks.

This idea overlapped neatly with another session led by the Royal Bank of Scotland (RBS), titled ‘Banking on the digital office’.

Both concluded that banks and finance organisations would do well to join forces with fintechs – and indeed, both Main Incubator and RBS are living embodiments of this idea.

RBS too collaborates with fintechs, through its Entrepeneurial Sparks programme, a free accelerator for start-ups and scale-ups.

So, even in these discussions of fintech, the co-creation message came through loud and clear: big banks should unite with new challengers to co-create something exciting, innovative and mutually beneficial.

Building a digital workplace for financial services

The RBS session, led by Fujitsu’s Ramanan Ramakrishna and Steve Wood, Head of Digital Workplace at RBS, demonstrated other ways in which incumbent finance organisations can adapt to fight off disruption.

Steve explained how it’s RBS’ philosophy to ensure that employees have a great experience at work. And, of course, office tech plays a big part in this.

Consequently, workplace IT at RBS is designed for the ease of the employees.

Staff are able to enrol any device in their corporate networks, so if there is a personal phone that you prefer you can use it at work too.

In addition, RBS have implemented a ‘frictionless office’ with no screens, no paper and no hardware. You just arrive and take a Chromebook out of the rack, and you can start working.

This was RBS’s response to employees calling for greater agility at work.

If you’d like to see this session in full, you can watch footage from the event below:

However, it’s about more than just catering to the needs of employees.

It’s about listening to their ideas and co-creating with them to design the most innovative and productive workplace possible.

Steve noted, for example, how he’d spoken to some grads who told him that they didn’t like using a particular system that’s ubiquitous throughout most office environments.

They enjoy working with a newer programme – which RBS is now implementing.

According to Steve, you have to employ these kinds of practices in order to recruit the best talent, who are attracted by technological excellence and forward thinking.

And this is also how you’ll keep up with the financial services sector more generally.

The other message which came through really strongly in this session was the need to be proactive to stay competitive in the industry.

In today’s hyper-competitive world it’s important to reach out to change. Waiting until a change has become standard across the industry isn’t enough.

Berlin Hyp: a case study for success

So far we’ve examined examples of co-creation between banks and fintech organisations, and banks and their employees.

But there were also some great examples of traditional co-creation in action at Forum 2017.

One such example was a German real estate finance provider, Berlin Hyp, who has recently been working with Fujitsu and consulting firm Okadis to overhaul their core banking system.

During a dedicated breakout session, the presenters – Berlin Hyp’s CEO Roman Berninger, Okadis CEO Björn Jonas, and Fujitsu’s Head of SAP Commerce and Analytics André Weller – explained how they’ve worked together to formulate a plan to overcome the problems facing the real estate finance firm.

Those chiefly being: growing regulatory requirements; Basel IV increasing capital demand; and rising competitive pressure.

Roman explained the solutions the team have co-created using the analogy of a house (since Berlin Hyp is primarily a bank for real estate).

The foundations of the house are made up of the core banking system, in this case, SAP HANA, which the team has designed to manage the regulatory processes that the bank is currently facing.

As Roman, Björn and André explained their project, the idea of a proactive approach once again asserted itself.

Berlin Hyp, as a relatively small bank, has managed to achieve great success in recent years due to its forward-thinking approach.

It makes bold decisions to engage in difficult (but worthwhile) processes of co-creation to optimise business processes – and so avoid many of the dangers that finance companies face today.

By taking the initiative in this way, it seems likely that Berlin Hyp will ensure its longevity, making it a great case study for other established finance organisations looking to do the same.

Blockchain: logical progression or total revolution?

So far we’ve examined three different examples of co-creation, using fintechs, industry partners, and employees and customers.

These have all been largely successful in keeping disruption at bay.

So what else is left that could faze finance firms?

The answer: blockchain.

This new technology has, as panellist Ian Bradbury put it, “the potential to be very disruptive.”  It’s an entirely new way of thinking about finance.

This is because there is trust built into the blockchain – so there is no need for a middle man to safeguard transactions (the position that banks have traditionally held).

We are still very much in the experimental, early phase of blockchain, or distributed ledger technology (DLT).

For this reason the power of blockchain can still only be seen as potential. Still, there are definitely big changes in organisations occurring due to this new technology.

Find out more about blockchain – read the white paper here.

Our panel revealed instances of large global banks conducting research on blockchain, and successfully proving the business case as a proof of concept – and yet refusing to publish or action the results.

So it seems, interestingly enough, that most banks are reluctant to push blockchain forward.

This is oddly at variance with the whole idea of being proactive, which stood out so consistently in the other financial services sessions.

Perhaps the current inertia is a result of fear. Most big banks are under the impression that releasing their information via blockchain will hurt their business.

But it’s important to remember that, just like fintech, DLT represents both a threat and an opportunity.

One clear advantage of blockchain: it speeds up transactions immeasurably.

Since 2015, when Fujitsu joined the hyper-ledger community, we’ve have managed to reduce the time of asset transfer between countries from three days to just a matter of hours.

And there are incredible opportunities for organisations that are early to move into this space (again, being proactive is key).

Only last month, Fujitsu announced a new blockchain project: a joint field trial of a person-to-person money transfer service using blockchain technology, alongside three of the biggest banks in Japan.

The trial is expected to reach around 90 million customers – it has a real-world impact. And it’s all the result of co-creation and a proactive approach to new technology.

Take-aways for financial services firms

Ultimately, it’s clear that Fujitsu Forum was a great occasion for financial services.

Of all the conclusions that came out of the talks and breakout sessions, two stood out:

  1. Co-creation is essential
  2. The necessity of being proactive

There’s no mistaking the fact that finance and banking is going through a difficult time. But there are many examples of established players in this sector not only surviving but thriving.

And their success appears to be in no small part due to their openness to collaboration and taking the initiative.

These are crucial practices that mark an organisation out for success, even in a rocky time.

Are you going to apply them to your business?

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