GTR catches up with Chris Skinner, author of Value Web, fintech commentator and chair of the European Financial Services Club (EFSC), on the most exciting fintech developments, and how banks should approach them.

GTR: What are the most promising fintech developments at the moment?

Skinner: What I find exciting right now is that in the front office we’ve seen apps and capabilities that are moving us to very smart structures for devices that can trade and transact across working capital supply chains, so we can track and monitor anything in our supply chain in real time through those app services and chips in the front office structures. In the middle office we’ve got application programming interfaces (APIs) that are really changing the whole way in which we can integrate and plug and play different services between corporates and financial institutions. In the back office, we’ve seen the core infrastructures changing into shared ledger structures using blockchain protocol technology but also data analytics and cloud and artificial intelligence. So you add all of this together and it’s blowing apart the old closed structures of banks and financial institutions, making them completely open.

GTR: What should banks’ attitude be about these developments?

Skinner: There are two sorts of banks: the old bank that wants to keep control of everything, build everything internally and make sure that everything is locked down and that there is no access to any of their processes from the external world – those banks will fail. Because of the open sources of all financial structures through apps and APIs and analytics, what they really should be doing is saying ‘where can we work with new companies that are doing clever things with these technologies that can supplement what we do, or potentially replace something that we don’t do very well?’

GTR: What about the regulation and KYC argument made by banks?

Skinner: Regulation is actually a lame excuse for banks not to change. It’s used a reason for saying ‘we’re licensed, have to do KYC, compliance, we’ve got all these rules so by the time fintechs realise how complex what we do it, then they’ll go away’. That’s just an excuse for not doing anything because you’re lazy. What you should be doing is saying ‘there is a regulatory overhead, but what most fintechs are doing is actually trying to solve the problems that regulatory overhead has caused’.