I attended the Association for Financial Technology meeting last week in Amelia Island, FL. This was my first visit to AFT and having learned that this group was formed in 1972, I was excited to see what the group had to offer in the way of market information, standards, and advocacy. The meeting was well attended with all the largest financial technology firms represented – collectively generating well over ten billion in revenue from financial technology sales. The venue was terrific, the speakers and panels were solid, and the networking opportunities were great. What was missing, however, was – well… market information, standards, and advocacy. In a previous life, I was in the semiconductor capital equipment industry, which was responsible for making Moore’s Law a reality. We had industry roadmaps, industry forecasts for both technology and spending, and we had very mature standards that, “increase industry efficiency by reducing/eliminating duplication of efforts, defining new markets, and promoting competition by lowering barriers to entry. [semi.org]” And as you can see by thinking about what your cell phone can do today, versus a decade ago, it has worked for 40 years; about the same age as the AFT.
As banking becomes both increasingly dependent upon technology and Silicon Valley takes aim at banking customers, I can’t see how the current way of doing banking fintech can remain competitive. Setting aside advocacy for the moment, spend forecasts would be helpful as would integration standards. For example, here’s a plot of capital equipment spending right off the semi.org website:
This immediately and universally available information is useful if you’re in the business and trying to plan capacity, raise money, or decide whether or not now is a good time to enter the SEMI business. I don’t know of any equivalent industry available document in the fintech space, apart from paid research reports.
Standards are a huge driver of industry efficiency but, they are very scarce in the fintech business. For example, if a new fintech provider wants to provide a service that leverages the existing banking infrastructure, it will have to develop adaptors to dozens of different systems with unique integration requirements for each. This is extremely costly in both time and resources. And since the number one concern of today’s fintech suppliers, as voiced last week at AFT, is “time to market” – it’s structurally counter productive.
The bottom line is, if you want an industry that doubles its value proposition every 18 months, time-to-market is non-negotiable. If we want to cut time-to-market in fintech, we’ve got to have robust industry standards and technology and spending forecasts. It too, is non-negotiable.