A lot of change has come to the tech market over the course of 2018. PSD2 is supposed to open the e-commerce market to SMEs, GDPR made a lot of noise back in May, while blockchain is gaining both traction and notoriety at the same time. WBJ sat down with Martin Zalewski, expert on design thinking, building and growing organizations
Interview by Beata Socha
WBJ: PSD2 has been in place for six months now. Can we see any forerunners of another FinTech revolution?
Martin Zalewski: A landscape of players is starting to form, and I’m sure in the next 6-12 months leaders will start emerging. When it comes to PSD2, we need to ask fundamental questions about its purpose: creating real value, not just opening up immense data sets. I’ve been engaged on a number of projects where the organization didn’t know what to do with their data. It’s got access, but the data isn’t always clean and manageable enough to give you insights, or driven by clearly defined strategy supported with the right competencies to design and deliver this strategy, in order to realize value. I’d like to stress here the importance of talent with competencies closest to leveraging data to deliver sustainable value to customers of the business to foster loyalty, as too often organizations go for technical competencies, which is wrong in my mind. You need a “customer-focused mindset with technical know-how.”
What matters is how you can leverage these data sets to understand your customers better, to create more value for them, and to understand what their needs are. I use Design Thinking to unravel the customers’ needs and then to figure out what tech solution can deliver on that need. Figure out what the need is and outsource the rest to people who can actually deliver the product.
Is the relationship between banks and FinTechs symbiotic or are they competitors?
There are FinTech technology firms, and FinTech “challenger banks.” On the tech side, those FinTechs are great at solving the problems traditional banks struggle with because of their creativity and agility in thinking and doing. I see them as certainly helping shake things up and ensuring innovation and progress.
On the FinTech Banking side, many are too small to make it on their own, and the cost of acquisition is high. These start-up banks give the traditional industry something to think about – new operating models and ways of servicing customers. Some of the FinTechs that are being launched will succeed on their own, others will be absorbed. These banks don’t have enough money to finance and deliver on the vertical and horizontal needs of their customer, but they have a vision – a sense of purpose, and that matters. They can scale up quickly through acquisitions. But every M&A decision should start and end with the question “how is this going to add value to your customer?”
Traditional banks are innovating their own models and changing infrastructure to get to market quicker. They can (and in my mind, should) start absorbing FinTech banks to give them a strong financial platform to grow on, and in return incorporate their product offering and learn from their agile way of servicing the customer. However, they should give the acquired brand complete autonomy and allow them to keep their brand, or those acquisitions will fail.
Nowadays FinTechs are good at finding new solutions and products, but they often lack experience that comes with time. When you’ve seen two booms and busts, you start to see patterns. It doesn’t necessarily follow that the same conditions will be repeated, but you know how to ask the right questions.
What solutions are in demand then?
Everyone, whether it be FinTechs or established banking organizations, needs to realize what matters to them, and that’s the relationship they hold with the customer and the elements of quality and compliance around it. FinTechs are much quicker at delivering on that need. Can the banks do the same thing? Yes, but they have to change their infrastructure. Also, sometimes banks don’t deliver the same solutions as FinTechs because they don’t care for the same market segment. And that’s a mistake. We need to think about financial inclusion. We can’t just focus on the Facebook, Instagram and Snapchat generations for financial services, we need to think about other generations too. We cannot disengage the rest of the population.
My favorite solutions that have a real impact on today’s and evolving needs are all supported with intelligent technologies to partner with the customer (AI), improve the experience of the engagement (CX supported with Virtual Reality), and deliver better outcomes (new digital products), by making the process more efficient (machine learning, automation).
How do you accomplish that?
Innovation, and the value it generates, needs to be communicated. Every organization needs to communicate clearly and with confidence to establish trust in their products. We keep spinning products and services without explaining why they exist, how they work and what they do. Any single organization is too small to do it at scale. It needs a collective effort supported by the government at large.
You could say that the entire blockchain revolution is based on distrust in institutions: people would rather trust mathematic formulas than institutions and governments. Where can blockchain build value?
Blockchain is revolutionizing all industries. Its values are speed, transparency and trust. Its applications are countless. Let’s look at a couple.
Let’s take trust, for example, and apply it to the consumer category of digital products. I’d love to be able to take my Airbnb or Uber ratings, which are confirmed and authenticated by those data providers, to other businesses where I get benefit from being a good consumer. This is a trusted piece of data that can be written on a block and transferred. Let’s look at speed and transparency and think of those two benefits in the insurance industry. Insurance needs to be transformed, particularly regarding the amount of paperwork and email exchanges that are necessary when filing a claim. You can make it more efficient and pleasant by digitizing it all, and your customer will always know where the application is at any given time. That improves the whole experience.
When the GDPR was implemented in late May, our inboxes filled with emails asking for permission or informing you of your rights. Don’t you think that the end result was that rather than reassure people, they were annoyed and scared that so many companies had access to their data?
My inbox was inundated with these permission emails and I think I responded to just two or three. I would have appreciated a clear explanation about why they need the data. And notice that all these mailings happened on the day of or the day before May 25. All at once. That’s not the way to do it. You’ve just thrown out your entire marketing list. And that’s because no one bothered to explain to the customer the value their consent would bring them. These companies will have to start building their client bases all over again. It’s just such a waste.
Do you think the US will adopt similar data protection laws?
My whole professional life has been centered around the “voice of the customer,” embedding it into every conversation to create products and services, and I do it so successfully because I’m delivering on my customers’ needs. This is evidence that customers have a lot of power to demand better protection in the US.
This is not unlike to what is happening with the #MeToo movement. There will be some impact of the Cambridge Analytica scandal on a global scale. Changes are being made by companies working across different legal jurisdictions. I don’t think US companies are going to abandon the European market. They will have to adapt.
Martin Zalewski has held a number of senior management and leadership roles at start-ups, as well as large global corporates, including GE Global Banking and Lloyds Banking Group, and currently follows his passion as a Chief Innovation Officer for a major UK FinTech. Martin’s foundation of leadership is Mindfulness, about which he writes on Twitter and Instagram (The Mindful Eye). He will share his views on the FinTech industry at the FinTech Digital Congress set to take place on November 13-14, 2018 at The Westin Warsaw Hotel.