Sunday, June 19, 2016
Swedish Fintech CEO: Banks Used To Laugh At Us, Now They Want To Be Us
Via Business Insider: At the creative conference Symposium Stockholm, co-hosted by Spotify's Daniel Ek, one topic of discussion was that traditional banks are under siege by fintech companies. Some say that 40 percent of global bankprofits are contested by fintech companies. Business Insider met up with Jacob de Geer, co-founder and CEO of Izettle, a fintech company founded in 2010, that was recently named Sweden's fastest growing tech-company by auditing firm Deloitte, having increased their revenue with over 30 000 percent in four years time. For a progressive commission Izettle offers an app and a card reader to small business that have traditonally been underserved by the banking sector eventhough they make up a hefty part of the GDP. ”Banks will not die, but they are in for a bumpy ride, just like the music industry was transformed ten years ago”, says de Geer. Banks have a vital role in the economy but they face an arduous task if they want to keep up, he says. They have failed to create an emotional connection to their brands, which is crucial for the millennial generation. They are hampered by a culture that is averse to change. And their technology is outdated. Some Swedish banks have components dating back to the 1960's that they dare not tinker with. "Changing their systems is like changing the motor of a Boeing airplane while in-flight between Stockholm and New York". Banks still have a tremendous advantage because of their large balance sheets and all the customer data they have collected. But according to de Geer, banks are not using the data properly. ”They only use ten percent of all data the collect. That is like having Spotify and only listen to ABBA. The banks could for instance use the data to make an exact assessment of your riskprofile when you apply for a loan”. When he founded Izettle sex years ago they faced an uphill battle and was met with resistance from the banks, even lobbying. ”At first they laughed at us and told us that no one would be interested in our services, saying that Sweden already had a very high penetration of cards”. After a while though, when Izettle were up and running, the bankers stopped laughing, he says. Soon Izettle heard rumours about banks wanting to what Jacob de Geer and his company was doing. Today, fintech is the talk of the town, and in 2015 global investments in fintech totaled 19.1 billion dollars. ”All the banks are talking about fintech, and have incubators and some even invest in the blockchain. Two years ago this was non-existant”, he says. Izettle is now adding one thousand customers per day and have a solid position in some countries in Europe and in Mexico and Brazil.