Creating strategic value through FinTech – and what tennis has in common with banking in the age of digitalisation

FinTech has transformed the financial industry significantly. From payments to deposits and lending to financing to investment management. Using innovative technologies like artificial intelligence, big data or blockchain, no aspect of financial services remains untouched. FinTech is not automatically a success though and it needs more than just a fancy tool to create value for start-ups, traditional financial institutions and customers alike. Jay Wilson discusses the strategic value of FinTech, providing insight on how traditional financial institutions and FinTech companies can boost innovation and enhance valuation in a complex regulatory environment. PlanetCompliance spoke to the author about his book, the challenges both sides face, how to reap the benefits of innovation and the different approach regulators need to take when it comes to FinTech.

When you aim to write a book about FinTech it is almost impossible to address all aspects of it, so you need strike a balance between covering as much of the territory as possible while at the provide a different angle. For “Creating Strategic Value Through Financial Technology” it is the view from various angles considering the cultural differences of start-ups and traditional financial institutions that have been around for decades. It is important because it is the basis of many decisions either has to make. Incumbents, especially for smaller financial institutions need to keep an eye on their competitors and existing market conditions; at the same time, they need to understand possibilities that come with technology and find the solutions that are right for them without getting lost in the abundant offering. Jay Wilson points out that most of the banks understand the desire of the customers for more digitalisation, but can’t throw all of their delivery overboard over night and as such many struggle to focus in order to find what makes sense in terms of the strategic plans of an organisation.

FinTech start-ups on the other hand often struggle with the acquisition of customers. Though they may have an attractive solution, it can take a lot of money and time to build a solid customer base, something traditional banks can build on. Therefore, it’s not surprising that when financial institutions are faced with the question whether they should build, partner or buy a FinTech solution, he sees a clear trend toward partnerships as in many cases in suits both. Having said that Jay warns that for a successful partnership the same principles apply as for an acquisition, i.e the obvious need for a fit for both sides to make it work. He also highlighted other risks of partnerships, for example, who owns the customer relationship, so that eventually every case may be different.

When asked for the one advice he would give traditional institutions, the answer is unambiguous: listen to the customer as the human element will remain at the centre of the client/bank relationship. To use one of the several tennis analogies Jay Wilson uses throughout the book, tennis may have changed significantly in terms of scoring, court surfaces (e.g. genetically engineered grass in Wimbledon), lighter and stronger materials etc., but the basic tenets and elements of the game have still remained the same as the ball still needs to get to the other side of the net. And in that sense, while technological evolutions may change the way we bank as we know it, the customer still remains and must so at the centre of financial services, which cannot exist and operate for the sake of itself.

Wilson’s book, based on this element, gives a very good overview of the technological advancements and how they change the different aspects of financial services. He shows us the historical context of FinTech from ATMs to the evolution to stock exchanges and more before the book discusses the various niches of FinTech such as alternative lending, payments, wealth management and insurance and the emerging trends. The third and last section then provides valuable insights regarding the options for both traditional financial institutions as well as FinTech companies. As during our conversation, Jay stresses the need to evolve and addresses the key strategic questions both sides face. He also focuses on the investment side in FinTech start-ups, particular with a view to early-stage evaluation of firms before he looks at the more mature companies and their options up until a successful exit strategy in the form of a merger or acquisition.

With covering so much ground, we obviously had to cover the aspect of FinTech regulation as well, but Jay wouldn’t be pinned down to a specific answer as to how regulators should address the subject and probably quite rightly so. As he points out, it is in a sense similar to the traditional approach and has to vary across jurisdictions. While more mature markets might need to focus more on the aspects of consumer protection, less developed countries in need of more financial inclusion may follow a different path. Eventually, not one size fits all and, as we know, the regulation of innovation is a balancing act.


“Creating Strategic Value through Financial Technology” by Jay W. Wilson is published by Wiley. It is available for purchase at the publisher’s website and Amazon.