Is Jamie Dimon right? Should banks be “scared sh*tless” of fintech?

During his last earnings call, JP Morgan Chase CEO, Jamie Dimon, was asked his views on Big Tech and Fintech. His reply created ripples across the financial services community:

“Absolutely, we should be scared shitless about that. We have plenty of resources, a lot of very smart people. We’ve just got to get quicker, better, faster. … As you look at what we’ve done, you’d say we’ve done a good job, but the other people have done a good job, too.”

Friends, Foes or Frenemies?

Jamie’s comments stirred up the decade long debate as to whether fintech and banking are friends, foes or (that dreadful phrase) “frenemies”. This is a debate that has been raging throughout the 16 years I’ve been in the fintech, banking and payments industry. Depending on where you play in the ecosystem it stirs heated emotions.

If you’re in Fintech, it’s easy to subscribe to the notion that “Fintech will eat the world” as Marc Andreesen said. Delivering new products and solutions in highly regulated institutions is incredibly difficult and nimbleness / speed to market is difficult to achieve. Most institutions are a product of decades-long acquisition sprees and rely on an incredibly complex patchwork of core infrastructures developed over 40+ years--many written in cobol (yes cobol!). Many banks appear swan-like: on the surface they create the perception of being calm and graceful to their customers while below the surface, they are manically trying to keep layer-upon-layer of multi-generational systems operating. Try changing a jet engine at 30,000 feet flying at 500 miles per hour. It’s a challenging position to be in.

If you’re a Bank or Credit Union, you have a huge advantage that many fintech sectors desperately need--massive distribution capabilities and reach--whether in the retail, SMB, commercial or wholesale banking space. And despite what many protagonists think, banks continue to have very strong brands, high levels of trust and NPS scores steadily growing as they adapt to the new world of highly savvy, digitally equipped users with ever increasing expectations. The challenge for banks is how to innovate at scale while still flying the plane.

We’re not at an inflection point. We are way beyond it.

If Covid has taught us anything, it’s that the banking and payments industry isn’t going back to the old way of doing things. Expectations have shifted so dramatically that customers won’t allow it. Winning the digital transformation battle is a choice between surviving and prospering; or slowly leaking customers to other more nimble, tech savvy competitors. It doesn’t matter whether you’re a community bank, credit union, regional bank or top 10 titan--all face the same challenges, just on a different scale.

When I arrived in the US in 2004 to launch and run Earthport (a fintech before fintech was “cool”--later acquired by Visa), there were over 7,000 regulated institutions. Now that number stands at just over 5,000 (a 30% drop). The message is clear--innovate or slowly whither. It doesn’t matter how strong you think your customer relationships are, switching costs are getting lower and lower. It’s never been easier to make the break to competitors who deliver transformative and delightful customer experiences. Banks and Credit Unions should be on high alert.

The answer lies in partnership

Banks. Credit Unions. Big Tech. FinTech. Those that win the digital transformation battle will be those that focus on best meeting and exceeding their customers’ expectations. Banks need to think from the “outside in”. Looking inwards and asking “how quickly and at what cost can we deliver this” is the wrong question. You’ll get bogged down in (pre?)historic ways of looking at the problem. Instead the question that will unlock the most meaningful opportunities for banks is “what do our customers truly desire and who has the best set of capabilities for us to exceed their expectations?” It’s likely that in many cases, fintech has already answered that question and created elegant and compelling solutions.

I’ve been fortunate to (i) run a fintech which partnered with banks all over the world, and (ii) run the global partnerships group at one of the world’s largest banks. I’ve seen both sides of the coin. It doesn’t matter whether you’re fintech or bank--partnerships work for everyone: Fintechs get distribution (and revenues!); banks get new and differentiated capabilities (on a much accelerated timeline); and customers gain access to better solutions that truly meet their needs.

First we created the Fintech community

Ten years ago, Anil Aggarwal and Simran Rekhi Aggarwal saw the coming fintech revolution and brought the community together for the first time by creating Money2020. It quickly became the largest fintech event in the US. People met. Opportunities were created. Partnerships were struck. And investments were secured. 

And now we’re transforming the fintech, payments and banking community with Fintech Meetup.

Our industry has grown hugely during the last decade. Venture investment in fintech is at record levels. The top 10 banks spend $1.5bn to $12bn on technology (c. 0.5% of net assets). Credit Unions are trying to transform their member experiences. The opportunities for partnerships to be created are limitless. The challenge, however, is finding the right partners and accessing the fintech community to accomplish this. We need a revolutionary approach to help the industry interact and collaborate with each other, which is why we created Fintech Meetup.

Unlike webinars and other events that focus on keynotes or fireside chats, Fintech Meetup cuts straight to the most valuable part of events--building connections face-to-face with other knowledgeable, influential fintech professionals. There are no speakers or sessions at Fintech Meetup. Just meetings. 

The purpose of our first event, Fintech Spring Meetup which will be held online on June 15-17, is to build an interactive community of people working in the fintech, payments, credit union and banking ecosystem who benefit from interacting with each other. The event is designed to provide you with 3 months worth of meetings in 3 half days with over 1,000 participants from 600 organizations covering 100+ categories of services and solutions. There are no traditional speakers or sessions...just 10,000+ direct one-to-one meetings with the people you want to meet--and the people who want to meet you.

So was Jamie right?

Perhaps. 

But the only way to influence the future is to embrace it.

And the best way to discover and participate in the future is by joining us at Fintech Spring Meetup, June 15-17.