Why BlueNotes is wrong: fintech has not peaked

I was intrigued by BlueNotes columnist Andrew Cornell’s recent article All aboard fintech’s Trojan horse which highlighted a KPMG report showing the value of Fintech investment in 2016 was well down on 2015.

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" Market dynamics, along with the needs of retail and corporate customers, will continue to evolve."
Tareq Muhmood, CEO ANZ Korea & Managing Director Global Subsidiaries, ANZ

Cornell argues this may signal the end of the financial technology revolution – at least the revolution that was going to overthrow banks. I disagree.

This is an interesting indicator but I don’t see why it is evidence a ‘revolution’ has passed or not.

I see two key trends conducive to a revolutionary environment for fintech:

  • Regulators, politicians and the general public are not ‘letting up’ on security and choice.
  • Innovation is the only realistic solution.

There will be an ongoing focus on how to protect the banking sector from another financial crisis. 

Capital, liquidity, business activities and the like will continue to be very well regulated to protect public interest.  

The rollout of global regulatory regime Basel III and accounting standards IFRS 9 will only enhance the focus banks need to put on how they operate. 


While I don’t necessarily agree with the direction of this regulatory push (I believe rather there should be greater transparency to allow savers and investors to make informed decisions), growing regulatory compliance complexity will demand more sophisticated regulatory technology and so ‘regtech’ is here for the long term.

Banks are also being forced to focus on markets and segments where they have scale and can carry the cost of compliance while still providing an attractive return to shareholders.

Yet customers will continue to operate across geographies and business areas. Market dynamics, along with the needs of retail and corporate customers, will continue to evolve, which may not always fit into a bank’s pre-determined parameters.

That means gaps in the market are likely to open up as the ability of banks to cater for the whole ‘financial wallet’ of a customer is reduced, creating opportunities for disruptive fintech or rapid change for a traditional bank (which history has shown is difficult).

The second driver is the ambition of regulators and policy makers for innovation – but innovation which is ‘safe’.

As well as implicitly driving demand for regtech with more regulation, central bankers are also encouraging fintech more generally, no doubt aware it is better for the banking sector to disrupt itself, leaving regulators more control and hopefully lessening instability during the disruption.

The Bank of England was one of the first off the mark to ‘open’ up the banking system to more competition. 

It is likely banks will be forced to open up more of their ‘pipes’ and ‘stores’ of customer information, again allowing more innovative and customer experience led organisations including fintechs to enter the market either with or in competition with traditional banks.

While the regulators and general public want a very ‘safe’ banking system, they also want innovation. Forcing banks to open up their architecture and customer data to other potential providers impacts the bank’s ability to control the customer interaction (and consequently profitability).

This provides greater opportunity for established technology players (Amazon, Facebook) and the newer Fintech players ( , and others.


Beyond these major drivers, I see other trends in technology, such as the raw talent migration into the sector, which also suggests we are still in the early stages of the fintech revolution.

Back in 1994, Vietnam’s economic rise was meant to be a five year miracle. It took 25 years and counting. The same will apply to how fintech will change our landscape – but it is irreversible.

My view on how this revolution will play out - the endgame - is financial services will have three components to it:

  • Very well regulated ‘national’ institutions that will provide the ‘back bone’ for each country in terms of strong liquidity and conservative balance sheets.
  • Dynamic product providers that provide the cross functional and cross border pipes for the financial services sector. These will include the likes of Alipay, Paypal, Visa and Trade Finance platforms.
  • Customer Experience players. These organisations bring it all together for the client in a beautiful format. They could be niche – for example, focussing on the retail expatriate market like - or those such as Amazon who want to build a broader financial services marketplace.

I would love to share a bottle of wine with Andrew Cornell in three-to-five-year’s time to reflect on what actually took place. His treat.

Tareq Muhmood is CEO Korea & Managing Director Global Subsidiaries, ANZ

Photo source: Shutterstock/ Regien Paassen

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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