Credit Karma

FinTech: Who’s In vs. Out?

I think I speak for many when I point out that some of the lists of FinTech companies, such as the American Banker’s Top 100, well, just aren’t especially good examples of FinTech (see list).

Maybe I’m reflecting my SF/tech-centric view, but I’m not alone saying if you did a word association test with FinTech, most are more likely to mention companies like Square or Lending Club – and not IBM or TCS.

Square logo                      lending club logo

Yes – I know, IBM and TCS sell technology to banks. In fact, I negotiated the first core banking system license from TCS for use in U.S. at Morgan Stanley, and used to work as a strategy consultant at CapGemini, so I know that category well. I’ve also worked in Product Management teams launching online services, and new products. Partners are often pivotal to success.

But by saying FinTech is anyone who sells products or services to financial services companies — and including retailers and card/payments and Bitcoin – you may be technically correct, but it’s just too broad a category.

Those selling to banks, especially start up’s in New York and London, such as those helped by the accelerators like the FinTech Innovation Lab, do matter. I’ve attended the NY FinTech Lab’s final presentation, and Maria Gotsch does a superb job. In the UK, Ian Ellis of the London Enterprise Tech Meet Up, and leaders like Silicon Valley Bank and Level 37, are helping to create new technology jobs ithrough their engagement.

But selling services and products to banks is not my focus, which is leading technology-enabled apps, services or digital channel leaders for consumers and businesses. Money 20/20 says FinTech is “enabling payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology.”

I believe strongly that, by being too inclusive (e.g. including retail), you can define FinTech to the point of it being meaningless. In fact, as I tweeted, magazines like Forbes got it wrong: Pitney Bowes is not one of the FinTech leaders. But a big company, like Wells Fargo can still very much be a leader in FinTech.  As I noted, Wells Fargo is actually one of the world leaders from a UX and digital channels perspective.

But I intend to be a little exclusive with the FinTech definition and my scope. I think we are also right to give an bigger voice to the likes of Patrick Collison of Stripe, who spoke last week at the Technomy event on the future of payments and innovation, and maybe a little less to the likes of IBM, BCG and Fiserv.

There’s a lot to learn from start up’s – like Betterment, Personal Capital and Credit Karma – and big company disruptors, like Apple with Apple Pay, than speaking to the average executive at your typical bank or payment company.

credit karma             personal-capital-logo         betterment-logo-blue

I think it’s no coincidence that one of the bigger laughs at Money 20/20 came from a speaker who noted that while Apple Pay dominated a lot of the debates — and American Express and First Data sent their CEO’s to speak — no one senior had come to the FinTech conference from Apple.

The speaker went on say that Apple had apparently sent a couple of product managers to the event, although few had actually seen them, and boasted in jest that he’d in fact been lucky enough to shake one of their hands, telling the audience, “I still haven’t washed that hand.”

apple pay

Looking ahead, in early December I’ll be reporting live from Future of Money in San Francisco, and will be guest blogging on Yodlee’s blog as well as profiling them in light of their recent successful IPO, and recent positive analyst coverage.

Tuesday Recap: Money 20/20

money2020-logo

Money 20/20 continued today, starting with a keynote by Ken Chenault, longtime CEO of American Express. What was interesting was both how much Ken embraced disruption, and versed he seemed in technology and  his views on prospects that many conference attendees would be seeking to take market share from American Express. Beyond noting he welcomes competition, he stressed that he was not at all afraid to cannibalize his own business in order to reinvent AMEX.

Chenault said he “could care less” if plastic eventually goes away – eliciting a strong response from the audience, and sees AMEX as poised to continue to succeed in today’s more digital world. He also said he was disappointed to see Dan Schulman leave American Express to run PayPal, but expressed confidence he had a deep bench on his management team.

Chenault was excited that American Express was part of launch of ApplePay, and dismissed a question asking whether Apple could eventually disintermediate them, saying he doubts Apple sees that as their core business and seemed fairly unconcerned about MCX and CurrentC. I think that both sentiments are correct, although it is early stages of the game.

Next up was Tom Taylor, VP of Amazon Payment Services, extremely compelling speaker, and lot of the session was dedicated to a case study of a UK retailer, AllSaints, that essentially does everything (design, make & sell its own clothes; design, build and operate all its stores and web site using its own people) except for its strong partnership with Amazon.

Another good session was on payments for affiliate networks, marketplaces and direct sellers. Bill Clerico, CEO of WePay made good points about how handling marketplaces are very different from traditional e-commerce, with the need to manage the risk of buyers and sellers.

Another session — wittily called Planet of the API’s: Making Banking & Payments Programmable — explored how API’s can change how consumers will interact with their banks. Zach Perret of Plaid spoke on how creating an ecosystem of bank API’s could lead to all kind of new end-to-end experiences with online services that would not necessarily come from your bank.

While Yodlee CEO Anil Arora said he doesn’t see the need for every bank to publish its own API’s — it’s just a technology he said, and doesn’t solve anything in itself (and of course, his company has built out integrations with over 10k financial institutions, a source of competitive advantage for Yodlee).  But Perret of Plaid took an alternative view, saying that Plaid expects to see at least 10,000 new start up’s / apps leveraging bank API’s over the next couple of years.

There were a couple of other good sessions today: Turning the topic to lending and the changing world of credit, there was an good discussion of alternative credit markets, with a roundtable featuring Ken Lin, CEO of Credit Karma, Aaron Vermut, CEO of Prosper Marketplace, Mike Cagney CEO of SoFi and others.

Key take away is that these companies are all solving for different issues in the current credit marketplace, where some find it difficult to obtain credit, or overpay due to market inefficiencies. Most agreed peer-to-peer term is overused, and emphasized use of risk models, data, and fact they acquire customers in new and traditional (direct mail!) models, just with a different mix.

The last session of the day was a debate on ApplePay, featuring Jim McCarthy, Global Head of Innovation and Strategic Partnerships at Visa, and Jim Smith, EVP and Head of Digital & Direct Channels at Wells Fargo, among others.

Jack Stephenson, SVP of First Data, commented on the “reality distortion field” attributed to Steve Jobs, being a factor, on some level, in that he’s never seen anything as big and complex come together until this effort to work with Apple.

Jim Smith said his team had been looking “for some time” for the right model for mobile payments, and were excited to be involved in the launch of Apple Pay, which will bring together banks, card networks, merchants and the right security model.

But many said it’s still early in the game, and Google Wallet will continue to evolve, with some noting that partnerships with biometric firms and other changes leveling the playing field, while adding the media were “missing the point” with MCX vs. Apple Pay story, a view supported by the team at Paydiant, the Boston-based software platform behind MCX.

A fitting end to the recap for today’s events at Money 20/20 – an event that some said might as well be called ApplePay 20/20 – with the day’s chatter commenting on the fact that Money 20/20 had just been bought by a European company (no word on whether the payment would be made in Bitcoin).