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To spread the fintech revolution , understand its challenges and problems, and give practical tips on the new financial ecosystem –this was how Shamir Karkal, head of BBVA's Open Platform, described the goal of Fintech University. He led the conference together with Chris Skinner, the guiding light behind the portal The Finanser , and a noted writer on the fintech revolution and the its main underlying technology –blockchain– through works such as Value Web.
At the opening of the conference, Skinner condensed the milestones in the history of humanity into two minutes, with particular emphasis on the creation of common structures.
The first shared beliefs of homo sapiens arose 200,000 years ago, and gave rise to thought and language; the appearance of money 5,000 years ago in Mesopotamia, when an element of reference and control was created to endow value; and the Industrial Revolution begun 250 years ago drove the creation of communication infrastructures. Until today, a time when the Internet is changing all our relations, producing “a layer shared by everyone which transforms the way of creating value in society and organizations”.
Skinner highlights that in the next 25 years we can expect to see an exchange in global value via the Internet. For the financial industry, creating value in this new era implies a rapid exchange process. “We need operations in real time. It doesn't make sense to talk about the development of the Internet of Things –where the refrigerator buys vegetables or the television rents contents– if the financial transaction is not instantaneous”.
The role of blockchain technology
Blockchain is the technology capable of supporting this P2P exchange (peer to peer), and validating and registering it like a virtual and global accounting book, and its dissemination and adoption will be key to the new way of creating value.
“Technology is very complex and for the time being its use will not be mainstream. By late 2016 and early 2017 we will begin to see projects built under verifiable registers that will change the organizational and social dynamics”, said Skinner.
Kulhman considers blockchain to be a transforming structure capable of ordering and authenticating transactions on our behalf. “The exchange will become more complex as more layers of software are added. There will be a move toward ever more sophisticated elements”.
Blockchain is a support that must be built on a relationship of trust. The negotiating processes will be open source, and we will need to establish the legal terms, as blockchain will transform all interactions. A whole shared infrastructure will need to be created, an ecosystem of regulatory agents. In short, it is a support, a base that must be built from relations of trust."
Kulhman acknowledges the complexity of the concept, but insists that “it should not be an excuse for not experimenting. The application ecosystem is not clear. We are in that fascinating decision-making moment. Will there be several blockchains per country, per economy, per population, per type of problem?”, he asked.
Shachar Bialick, founder of Curve, wanted to transform payment experiences into a financial environment of fragmented services in which accessibility is key. “The future does not necessarily mean creating a better bank. The future is to do something different, like a platform that connects you when you're on the go with everything to do with your money in your daily life. One card for everything, that's what we propose”.
Another trend was highlighted by Leoni Runge from Everledger, the winning startup in BBVA Open Talent 2015. She spoke about how her company, specialized in antifraud security in such exclusive markets as the diamond trade, jewels, artworks, luxury articles and vintage wines, uses blockchain technology and Big Data to create an unchanging, transparent, secure and global accounting system.
Salvador García Andrés explained Ebury's commitment to helping SMEs to become global enterprises through platforms and solutions that are already used by 12,500 customers. “We believe in a collaborative ecosystem of financial services in which the traditional banks have the structure and the fintechs have the connection with the needs of the end user”.
Money, money, money
In 2015, over 50 million dollars were invested in startups in the fintech environment, and all the members of the investors' panel agreed that the future of the industry lies with companies that are bold enough to contribute to the development of blockchain. What other criteria do investors follow when deciding whether to support them?
Vica Epifantseva of Anthemis said her firm takes into account aspects such as the vocation to reinvent the financial service space, the competitive angle and the human resources, which have to be bold, fearless, and have a clear vision. “We invest in firms in Silicon Valley and in Israel and we focus above all on the world of development”.
Reshma Sohoni of Seedcamp values projects that have to do with accessibility, distribution and democratization of services. “We're looking for startups with a global vocation who create digital frameworks quickly. In other words, we invest in value. The mindset and ambition of the creators are other key criteria”.
Juan López Carretero heads the BBVA team that assesses and negotiates the bank's fintech acquisitions and investments. “We look above all at projects that offer financial services in different ways, that reinvent experiences. We also look at technologies and skills that we don't have and we rate very highly the aspects of vision and the team's commitment without forgetting that each investment is a learning opportunity”.
The expert's vision
Yan Ranchere from Anthemis shared his extensive knowledge of the trends that are giving shape to innovation in financial services. In a conversation with Chris Skinner, he enumerated the technologies without which there is no future, and in which the banks have invested and dedicated resources: Big Data, blockchain, bitcoin, mobile services, security and cloud technology. “The goal is to be more competitive in a global market”.
Ranchere said of blockchain: “It's a very interesting concept, but we're still at an early stage of the game. We need to move forward, stop talking of it as a trend and begin to see the real possibilities and applications”.
A question of trust
Shamir Karkal talked to Taavet Hinrikus, creator of Transferwise, about the secret to creating a global fintech company for P2P online transfers and currency exchange, which in only five years has grown until it now employs 500 people.
“We spent the first year testing to find how we could be faster, cheaper and simpler, and above all, how to break through the barrier of mistrust. The first customer is always the most difficult –why did two types of Estonia create trust? In our case the passport to trust was the users' own recommendations. Word of mouth, recommendations on social networks”.
Another recommendation from the founder of Transferwise for becoming a global fintech is to adapt to the terminology and the language and build local elements of trust. “Localization is very important for trust”.
Hinrikus also highlighted the importance of collaboration between startups to create ecosystem –they do so with Number26– and to maintain the spirit of learning constantly alive.