JAX Finance Blog

JAX FINANCE BLOG

JAX Finance, 3-6 April 2017
The Conference for Technology in Finance

28 Mar 2017

No. 17 FinTech Influencer Pascal Bouvier

No. 17 FinTech Influencer Pascal Bouvier

Pascal Bouvier, Venture Partner at Santander InnoVentures and general FinTech Influencer, talks to us about the future identity of financial institutions and explains his rule for the "evolve or die" theorem. Further on, he adds the variable of what he calls the data wars to the calculation of FinTech.

JAX Finance: What got you interested in FinTech?

Pascal Bouvier:

I have over 20 years of experience working with financial institutions and tech startups alike. As I moved back into an investor role after having operated companies for many years, I was naturally attracted to the monumental change the financial services industry is facing and ended up applying my skills to the intersection of “Fin” and “Tech”. The fact the financial services industry was a laggard when it comes to applying technology and entering the digital age and its sheer size were strong attractors.

JAX Finance: Do you think the phrase “evolve or die” describes banks’ situation right now?

Bouvier:

First, it describes all financial institutions – insurers, asset managers, banks. Second, it describes financial institutions whether they are retail focused or wholesale focused. Third, the degree by which this phrase is applicable varies based on both sizes, complexity of the business model and geographic coverage.

 As a simple rule, the bigger the size and geographic coverage, the more complex and broad the product/service offering, the more extensive the client coverage, the truer this phrase is.

From that point of view, the last 5 years of “FinTech” is only the beginning.  

JAX Finance: Does FinTech still deserve the label “disruptive” or has it outshined this tag?

Bouvier:

There are many definitions of FinTech and many misunderstand the meaning of “disruption”. I hold a maximalist view of FinTech:  FinTech = FinServ. This means the entire industry, all of its actors will behave more like technology companies than financial institutions going forward. This is the promise and the power of the internet as well as other enabling technologies. From that point of view, the last 5 years of “FinTech” is only the beginning. As for disruption, one needs to make a distinction between systemic and systematic innovation. As a rule of thumb, systematic innovation (incremental) is always easier to come by that systemic innovation (major). It is obvious that most lending/investing/savings/payments/insurance models will be altered going forward. Some via a series of baby steps, some brutally so. Applying the term “disruptive” in an undifferentiated manner risks diluting the real transformation taking place within the industry which is multi-faceted.

As a simple rule, the bigger the size and geographic coverage, the more complex and broad the product/service offering, the more extensive the client coverage, the truer this phrase [evolve or die] is.

JAX Finance: What are the biggest (and most important) trends in FinTech right now?

Bouvier:

The potential for deregulation coming from the US with the new administration. What I call the data wars between various trading blocks and jurisdictions (who owns, controls, is responsible for data, data privacy, security, monetization). Data being the new asset class off of which financial institutions and FinTech startups will trade, these data wars are particularly important. The move to loosen the grip banks have on checking accounts through open banking, API banking, banking as a service, and the legislative directives such as PSD2.  Edge computing + AI which will see the decentralization of computing data from the cloud to nodes (connected things) and how will the industry be impacted. Finally the rise of digital identities in financial service.

Data being the new asset class of which financial institutions and FinTech startups will trade; these data wars are particularly important.

JAX Finance: Do you think the investment potential will attract entrepreneurs to FinTech?

Bouvier:

Yes. Further, with each new “FinTech wave” we will see entrepreneurs with greater degrees of sophistication applying themselves to more complex value propositions. In other words, it is not only about digitizing the front end.

JAX Finance: How important is blockchain in this equation? Can FinTech help it go mainstream?

Bouvier:

Not as important as the current hype. More important than financial institutions realize. By that, I mean that true blockchain tech (the permissionless variety) may be uniquely disruptive but have less applicability across use cases, while distributed ledger technology (the permissioned variety) will have wider applicability but in a more incremental way without major disruptions.

JAX Finance: What does innovation mean to you?

Bouvier:

The application of man-made technology that results in productivity growth, i.e. doing more with less or delivering a certain level of output at a lower cost and with a tier value.

JAX Finance: What does the future of finance look like?

Bouvier:

The future of finance, or at least one of its version, is already here. It is called Ant Financial, Tencent …

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