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It might seem exaggerated, but fintech is going through challenging times. Since 2014, it has been pointed as an alternative for the increasingly regulated traditional financial markets and presented successful funding cases – at least, up to now. According to the research firm CB Insights, the investments on venture capital-backed fintech cooled off in the last quarter of 2015, despite reaching the best year in its history.

Besides, fintech might not be as “disruptive” as it wants to be. In a recent article published by The Financial Times, the venture capital executive Mark Tluszcz wrote about how “there has been very little innovation and nothing truly transformational” in fintech. According to him, most of their “hype” is not justified – they are just regular businesses.

What does innovation and transformation stand for, after all? Is it about processes, business models, solutions? For sure. But it is also about mission, values, culture, purposes. We can’t change the first ones without changing the latters, and this is why most fintech are being challenged right now. They are indeed presenting new market solutions and, at least technically, differentiating themselves, but with the same old thinking – profit for few and capital concentration.

The problem is “the same old thinking” – it doesn’t make sense for many actors in our globalized, sharing, collaborative society. It doesn’t sound interesting for the new generations, future clients and investors of this industry. We all like innovation, but we don’t want to use it for feeding the same vicious circle that created such global problems as poverty and inequality.

It is shameful that we, as an ever growing technological society, have 2,8 billion people living with less than 2 dollars a day. What is fintech doing to change this scenario?

A win-win situation

Last February, Horyou, the social network for social good, created the first global social currency, Spotlight. It is a fintech project, although Horyou is not a fintech company. Spotlight is a micro-funding tool that allows any member of the network to support social initiatives and non-profit organizations through a real digital currency. It also allows any member of the platform to get funds for their own projects and initiatives. And it opens a world of opportunities for investors thanks to its conscious capitalism background.

The innovation with Spotlight is it provides an alternative source of funding for hundreds of millions of entrepreneurs, youth, artists or organizations. It spreads innovation globally and it gives power and initiative to all its actors. “Spotlights is a revolution of internet which affects not only the Corporate Social Responsibility sector but the whole society on a global level”, says Yonathan Parienti, founder and CEO of Horyou.

There is hope. And that’s why I wish a long, long life for fintech, as it discovers the path that combines innovation, transformation and purpose for a better world.

Brian McGoldrick, Head of compliance at Leman Solicitors
Brian McGoldrick, Head of compliance at Leman Solicitors

The Future of Banking and Financial Services Summit took place in The Gibson Hotel, Dublin on April 28th. Held in conjunction with The Sunday Business Post and iQuest events, its attendees represented the full spectrum of financial services, from retail banking to payments to regulatory risk and compliance.

Everyday, we realize the financial services industry is evolving. With the use of technology, movement of capital is becoming more fluid, methods of exchange are changing and as Horyou is harnessing these opportunities with their new social currency “Spotlight”, I was interested to learn from the executives leading this change.  

The morning keynote was delivered by Colm Lyon, CEO of Fire Financial Services who alluded to “The Great Fintech Scramble”, where many financial services companies are racing to capture market share. He was optimistic about the opportunities that lie across the industry for apps and payments services but also cautioned technology evangelists: “It takes a long time and capital to build a fintech business”.

Colm Lyon, CEO of Fire Financial Services
Colm Lyon, CEO of Fire Financial Services
There was some interesting comments made about the legalities of fintech; it’s easy to forget how rapid these changes are but any industry of course still needs to be governed. Dominic Conlon, Head of the Corporate Department at Lehman Solicitors highlighted the fact that archaic laws don’t fit with the constantly evolving nature of cyberspace. “The law doesn’t know about payments”, he said, and Ronan Hughes, Head of European Payments Services at RBS joined him in saying: “inaction is not an option”.

Ronan McGoldrick of Leman Solicitors reiterated how difficult it is to regulate in the area of fintech and the need for collaboration. “Regulators and innovators will need to come together”, he said. So here another one of the founding principles of Horyou was highlighted – collective action.

The afternoon session was centered around how finance will reinvent itself in this era of disruptive innovation. Anthony Watson, President and CEO of Uphold, the world’s fastest growing money platform, said that the Keynesian model of a bank lending according to what it says on their balance sheet is over. “I would be worried if I was a big bank, the industry is changing, they cannot rely on their legacy anymore”, he said.

Watson also made reference to banks and social impact with regard to fees. He said that technology gives us a real chance to democratize the industry and level out the playing field. This reminded me of the potential that Horyou’s Spotlight has, where it can can allow investors who have the capital to give it to impactors who don’t, therefore spreading wealth and ultimately making a positive social impact.

Giuseppe Insalaco, Senior Advisor at Central Bank of Ireland, closed with his personal view on what the future holds for the financial services industry. Emerging trends, he highlighted, were ‘enhanced consumer intelligence’ and ‘razor sharp’ market segmentation. ”Data is the new gold”, he said. As internet users leave their electronic footprint, entrepreneurs harness this data and identify customers’ needs. However, this also makes speed to market critical and intensifies competition.   In his crystal ball analysis, Insalaco predicted crowdfunding coming of age and legitimizing, becoming less social and more business led. He was fearful of the emergence of an arms race in cybersecurity – “A wall is only as good as the next hacker” -, and predicted an escalation of online breaches.

The main takeaways from the event was that fintech brings opportunities and threats to the financial services industry. Customers will always need a place to manage their finances; whether this is in a traditional bank or an online money platform, they will go with whoever offers them the best return. New platforms like Horyou’s Spotlight add yet another layer, offering social returns.

Written by Dearbhla Gavin

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