Toby Olshanetsky, founder and CEO, prooV
The Financial Services (FS) sector is in the middle of a digital revolution that represents the most significant change in banking for centuries. In most markets, FinTech start-ups present a credible threat to incumbent banks. A recent PWC report highlights that 83% of respondents from traditional FS firms believe part of their business is at risk of being lost to standalone FinTech companies, reaching a staggering 95% in the case of banks. Using a combination of technology, consumer-centric service, and flexible business practices, these new companies are reducing the cost of doing business, extending their customer base and taking market-share from established rivals.
The saying “innovate or die” has never rung truer, particularly in the FS sector. Banks now face rising competitive threats on all sides as new technology companies and others seek to poach their customers. The most pressing question for these long standing, traditional banks becomes how can they best innovate and – more importantly – how do they scout for the right innovation?
Financial Service companies all over the world recognize that, in an age of digital disruption, they must be tuned-in to emerging technology. They must be ready to take the leap on the game-changing solutions that will build their innovation strategies, push the boundaries of what they offer and maintain their competitive advantage. How? They must work with startups and tech-mavericks to develop a more entrepreneurial corporate culture, one which will position them in far better stead for our always-on, constantly changing digital world.
The reality is that many FS companies do not have the culture necessary to nurture new technology, particularly technology that may eventually threaten their entire business model. It’s human nature, after all, to retreat into entrenched, habitual behavior when you feel challenged, rather than embrace the new and the different. FS businesses are also so bogged down by complex, tedious legacy IT systems that the mere thought of integrating these with new technology is daunting, even for the most experienced of CIOs and CTOs. Yet advances in technology and shifts in customer expectation show no signs of abating, bringing with them both disruption and opportunity.
Truth is, banks and fintech companies have much to gain from working together. Traditional retail banks get access to the latest technology and have the opportunity to digitally innovate, while FinTechs get access to their biggest potential customers and a valuable distribution network. prooV was designed to facilitate this collaboration, providing the means for greater innovation awareness and easier adoption of new technology and solutions. Finally, bureaucracy, communication, time and infrastructure are no longer preventing financial enterprises from scouting and embracing innovation.
prooV is a platform that brings vendors and companies together in a simple and agile way, so they can test new software. As with so many successful business ideas, the premise is startlingly simple and a win-win for both parties: clients get to discover the next business-disrupting technology at low risk and low cost, vendors get to “prooV” to clients the full potential of their software, letting the tech talk for itself.
The platform enables enterprises, and startups to communicate directly in order to improve technology and scale new solutions quickly. Its Pilot-as-a-Service approach reimagines the PoC process from beginning to end, making it easier for enterprises and vendors alike to share new solutions, test, track, analyze and report.
Don’t just take my word for it. The Isracard Group is one of Israel’s leading credit card companies providing both issuing and credit clearing services to all four of the country’s major credit card brands: American Express, MasterCard, Isracard, and Visa. After experiencing initial success on the prooV platform, they quickly took their activity to the next level by launching Isracard prooVday , a PoC competition featuring 12 PoC categories that garnered 400 plus startup applications, resulting in 31 active PoCs.
It’s time for financial services players to start taking bold steps to engage with emerging innovations. As we look forward to 2017 we should see FS companies beginning to confidently scout and embrace innovation. In turn, this will help build the right foundations to allow them to disrupt their own business model, rather than sit on the sidelines watching challenger models disintermediate them.