The question is: do banks even care (about Innovation) ?

Thinking out loud in the middle of my home town summer time…

You will not find a single financial institution saying “we don’t care about innovation” … It does not look right, not good to investors, and not very stimulating for your customers.
Without being too generalist, you innovate because you have something new to sell or build, or because you can do the same better, cheaper or faster.

Innovation means efficiency, more often than not. And unless you have very stupid customers or shareholders, efficiency means leaner cost structure, and very often it comes handy to no lay off people and keep doing the same with the double (conservative) of the resources needed.

Almost every banker will name regulation as the most compelling reason stopping innovation to happen, or at very least make that process very difficult.

This is half of the truth, if you hear me.
The other half is about …..
…. Technology readiness (and subsequent lack of agility).
You can build a full bank, in the cloud, in few months, with close to the same security and scalability standards of any other bank in the market. This “new” thing can also handle alternative currencies, multiple wallets, mobile payments, Personal Finance Management, and if they are honest enough, even services like forex AND remittances way cheaper than the actual bank rates (and for sure cheaper than Western Union).
Ask a “old world” bank to do the same, and the CIO will say: sure, but with a multimillion dollars budget and one of the IBMs of this world drinking too much champagne way before Xmas.

The question still remains: do banks even care ?

Banks are, like every business, a collection of human beings, that in average tends to put their own personal agenda on the forefront of the criteria influencing their decision. It s human.
We are at this generational break, where most of the highest ranked managers of the top 100 banks in the world will NOT see the real disruption coming.
All they see today is that some guys not wearing suites anymore, few very successfully, building businesses in the banking space, and in a new paradigm.
Say peer to peer and peer to SMS lending.
Take all the IWOCA, WONGA, ZOPA, LENDDO, AFLUENTA. AMP and even the microlending platforms of this planet, all together: I don’t know if anybody has done it yet (why bother, again) but I am pretty sure they are, all together, damaging a single digit fraction of the whole credit business, worldwide.
So many of the today decision makers will no longer be by the time all that will become a real disruption.

Too simplistic? Maybe, but this is my blog and there is freedom of expression right ;-)?

It takes a bright, charismatic, outspoken, self awareness energy to embrace the innovation and disruption side of the financial services. You know why?
Because compared to the way they are today, the ” disrupted, innovation-driven, new ” financial services would be
– cheaper
– inclusive (not cheaper for the rich)
– more efficient
– for the greater good

… and there is only ONE Professor Yunus, of the Grameen Bank, every HUNDREDS of today financial institutions CEOs.

Stay tuned, have been off for a while, lot of things have happened, need to spend some more time writing …

Matteo

Fintech Bootcamp rocks… #sbtvc proudly rocking with them!

In the past 24 months the rise of Fintech incubators, all over the world, has taken an incredible speed.
Looks like I am not the only one thinking that the disruption will hit our beloved banks (and financial institutions in general) sooner rather then later.

I have been quite on my blog recently, whilst my life has gotten busier than ever before, but the two facts are unrelated.
The reason why I thought this one was a good moment to “talk” is the launch of Startup Bootcamp in its very first Fintech instance, out if St. Catherine docks in London.

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There are four point of attention I d like to make:

– the concept is great: 30 startups, 3 years, equity at stake, great network of entrepreneurs, tailored mentoring, no bullshit
– the team is awesome, and worth to mention another great chapter for my former colleague Nektarios (congrats dude), in all modesty brought to the Innotribe team by yours truly and infected with the innovation virus(es) to a point of no return – literally!
– the partners, the sponsors and the coaches of this adventure have a lot to say in the Fintech space, and I am talking about MasterCard, Lloyd’s, Rabobank, and many more I m sure you will hear a lot about very soon
– SBT Venture Capital, my fund, is proud to be one of the partners (which is kind of the reason why I am blogging this piece, obviously)

I must say I am quite familiar with this matter, in the sense that I always thought that the opportunity to take part of a qualified deal flow, vetted by the community, in the early stage startup space, and in a “sandbox like” environment was a good thing to do (all these drivers are already underpinning the Innotribe Startup Challenge).

Bank should do this too.

There are three different kind of attitudes towards startups banks are generally applying:
– “who cares, in any case what damage can they make, a fraction of a percent of our business?” (The “Dums”)
– let s watch them and simply buy the most successful one (The “Arrogant”)
– stay close. Try them. Eventually, invest. Learn from their lean approach. Engage. Get inspired (the “Smartass”)

So, Bootcamp is for the latter.
You (financial institutions) can stay around without necessarily invest in it.
We are planning to.
See you at the London st Catherine docks.

Stay tuned

Matteo

#SBT Venture Capital #Sberbank #walkthetalk … Live from Hong Kong

I m about to go on stage at the Finance Innovation forum 2013, my first talk post-Innotribe era.
Interesting enough, until September this year I dealt with innovation from a very neutral platform, helping financial organizations to work with startups, apprehend innovation processes, build new products, and now I am standing behind one of the largest financial institutions worldwide, Sberbank, who decided to walk the innovation talk and launch a Fintech fund.

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Sberbank is not the only bank in the world investing in startups.
It IS though the FIRST financial institution launching a vertical captive fund investing in Fintech startups.

So if you know put yourself in my shoes,you realize how disruptive this change is.

I literally jumped on the other side of the equation.

And – when you look at it – there is no more logical decision for a bank to take.
Many banks have an innovation department (yet not the majority, though). But without the freedom to invest, without the independence of action they need, and most importantly without managing it as a business.

Let me use one of my favorite expressions: I will not hide myself behind my finger.
There are challenges in marrying young dynamic startups to a 350 thousands people organization.
The enthusiasm, the willingness to progress fast, the freshness and sometimes the naiveness and the fragility of the startup has to cope with the sales cycle of the bank, its legacy, its policies and politics.

But is the right way to go, and the reason why I joined.

The intention is truly to walk the talk, in an unexplored field.
Why unexplored?
Again, because investing in Fintech startups for a bank seems to be the natural thing to do to reinvent itself. Yet, as all pioneers, we forge the way, learning the hard way. And I am here to write this story, together with Mircea and the team.

The team…. Let me wrote the BIO of the guys I worked with so far in three lines with my colorized expressions:

Mircea Mihaescu, my Partner in crime: the gray bald hair of the team, young hearted Rumanian Canadian, former entrepreneur, IBMer, with the balls to change his life once again to bring Innovation into Sberbank three years ago. Smart, determinate, reliable, and with the curiosity of a child.

Tony Fish, advisor to the fund: the multiple exits entrepreneur with the brightest mind, and a marvelous humility and openness that drives him to share and discover rather than show off and keep knowledge for himself (as many money-made guys do). A living book on best practices on innovation and startups, and a true good person.

Andrew Martin, the only one with hair in the team, even if white. I consider him the coach of SBT, he is behind our financials and legal negotiations, very hard to spot something he has not seen yet, but – most importantly – someone who always work with a smile on his face. A great person I am discovering day after day. His favorite sentence “I have seen it before”… And he actually has!

#feelsgood

I can t wait to announce our next investments, and more on this journey.

Stay tuned

Matteo