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Something exciting in the state of Denmark (and FinTech!)

What was evident at Money2020, Jonathan Lear observes, was the symbiosis developing between the FinTechs and banks that marks the shift in sentiment from past events.

LIKE many of my industry colleagues and partners, I came away from Copenhagen and Money2020 invigorated, inspired and with a very clear and vivid picture of where the financial world, and in particular, the payments industry, is likely to head.

Money2020 brought together the FinTechs and the banks under one – very large – roof and the dynamic was interesting. It was evident that most of the banks now accept the world is changing (there are still some in denial!) and there seemed to be a renewed sense that firm action and reassessment is needed in order to preserve and build their franchises. Of course, some banks are at the forefront of embracing this change including Bank of America Merrill Lynch, Santander and HSBC. Carlos Torres Vila the CEO of BBVA, made a very strong impression with his drive and vision to transform the bank. It's no surprise to us that many of these banks are valued customers and partners with Earthport. Other banks are still determining where they figure in tomorrow's food chain. But the clock is ticking.

Whether everyone sees that the clock is ticking fast, that the pace of change demands a very nimble approach, is another matter. The FinTechs are not hamstrung by large, bureaucratic corporate structures that change direction slowly. This is the primary reason that the rise of the sector is seen as such a big wake-up call for the banks. However, neither banks nor FinTechs should be scared – this is an opportunity to embrace change and for everyone to win. A rising tide lifts all boats!

The zeitgeist was captured by the session on cross-border payments that featured Earthport's CEO, Hank Uberoi. What emerged here was a realisation that the current way of making cross-border international payments is cumbersome, expensive and ineffective. The current "many-to-many" system of having to manage multiple correspondent banking relationships will give way to the sort of "hub and spoke" model that Earthport delivers to its clients. In that context, the various discussions I had in Copenhagen affirmed our view that Earthport is indeed a market innovator and our business proposition is very compelling. Earthport supports change and helps drive innovation and collaboration.

To continue to innovate, however, the payments industry has to contend with many hurdles. The world is changing for everyone – banks and FinTechs alike. Factors such as regulatory change can act as a brake on just how creative you can be. For example, when it comes to payments, it is possibly easier to innovate on a country-by-country basis than cross-border. Right now, the banks are frenetically reacting to the many new regulations and directives coming their way. One of the most transformational of these regulations being PSD2, which will be the catalyst for exponential change within payments that will alter the competitive landscape.

Regulation and its impact are two of the reasons why, at Earthport, we are firm advocates of collaboration. What was very evident in Copenhagen was the symbiosis developing between the FinTechs and banks. This was a marked shift in sentiment from past events surrounding the FinTechs and an indication of the growing maturity of the sector. I cannot count the number of times I heard a FinTech speaker declare a willingness to work alongside the banking sector as partners, as vendors, as providers. To me this was one of the most exciting aspects of Money2020 and one that needs to be fully exploited. We are, after all, part of the same eco-system.

The conference's theme in Denmark was "the center of the revolution" which really summed up the mood. And at the heart of things is precisely where we aim to be at Earthport. Money2020 underlined to me that we are heading in an exciting direction. The question is who will accompany us – be they companies, banks or individuals – in making that journey? Come and join us!


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