Fintech Disruptors: Danske Bank has been closely aligned with developments in fintech as the partner behind MobilePay. I’m wondering what changes you’ve observed in the attitudes of both fintechs and banks over the past year?
Bent Richard Eidem: I’ve witnessed changes in the attitudes of both banks and fintech firms recently. On the fintech side, I’ve seen much more awareness that the “fin” – that is, the customers and processes – is just as important as the “tech”. On the banking side, it’s obvious that banks are now taking fintech seriously, and I think this convergence of attitudes is going to result in some significant developments in services to customers. In saying that, I should stress these changes won’t just be about payments. I think new technologies and better data management are going to mean changes in areas such as mortgages, where you’ll see the approval process speed up for qualified customers, and funds released in minutes rather than days or weeks. Blockchain and AI are going to play significant roles here; most of all, though, the continued trend towards partnership between banks and fintechs is going to lead the way.
Fintech Disruptors: Danske Bank successfully picked one of Europe’s biggest winners when it created MobilePay. What factors would you say make for a “fintech winner”?
Bent Richard Eidem: I think there are three key factors. Firstly, the capacity to identify gaps in the market and innovate to fill those gaps. Right now, there are lots of opportunities around in automating regulatory requirements, and these are just waiting for players with the right solutions. Secondly, fintech winners see complacency as the enemy, and are constantly looking for ways to better serve their customers and take the next step to improve their offering. Linked to that is my third factor – the capacity to scale a successful technology quickly, before competitors figure out what you are doing. If you look at MobilePay in the payments space, they were able to leverage their success very rapidly indeed – which, of course, led to them being even more successful.
Fintech Disruptors: You mention opportunities in the regulatory environment there. Can you say more about what you see happening in this space?
Bent Richard Eidem: I think there’s a pressing need in areas such as AML and KYC for the authorities to standardise their requirements across regions and nations. The more time and resources that are spent in these areas, the less time is available for listening to customers and product development – in short, business development and innovation, which are the lifeblood of any business. Looking away from the regulators themselves and their requirements, I think that banks should be trying to collaborate and utilise technology to automate regulatory processes where possible. Of course it’s vital to ensure the security of the financial system and proper cash flows within that system, but there are big gaps between markets like Singapore, which has had a highly effective regulatory model, and other markets that have been less successful.
Fintech Disruptors: Thinking about the fintech environment more broadly, what do you see as the key trends for 2018?
Bent Richard Eidem: The advent of PSD2 is a huge opportunity for fintechs and must be used proactively to understand how banks operate technologies and relate to their customers. I think there are also opportunities in robotics and AI, in terms of using bank APIs to assess how banks relate to customers and how this could be improved. Of course, a major development such as PSD2 also presents a threat, in that there will be question marks over who owns the customer relationships once customer channels are thrown open. In some instances, you’ll see partnerships; in others, it’s likely you’ll see the Facebook model, where they attempt to take over the bank’s transactions and functionality. For us at Danske, we continue to believe in the partnership model, and we’re very interested in investing in our relationships with fintechs, especially through our incubator hub.