Hedgebook CEO Richard Eaddy recently spent a few weeks in London catching up with corporate clients, banks, brokers and other fintech providers. It seems timely to note some of his observations from time spent in this influential market – other than the pubs being full on Thursday and the city of London emptying out on Fridays.
Having been based in London with Hedgebook in the lead up to Brexit and beyond – as well as experiencing the slowdown due to Covid – Richard was pleased to see London banks seem to have turned the corner. But as the old saying goes, it can be a bit like turning the Queen Mary around (the ship that is).
So what did he observe?
Payments solutions an area of disruption
It was interesting to see several banks (including the more established brands) are still battling with legacy IT systems, some dating back to the 60s and 70s. It’s resulted in payments being one area where banks are being actively disrupted.
There are any number of small (and not so small) fintechs trying to eat their lunch with a myriad of payments solutions in the market. Bank budgets are now being focused on solving this problem and we should see them running on more updated software architecture in the near future. How this plays with the rise in payments solutions will be interesting to watch.
Bank budgets are opening up
Over the last five to six years banks have focused on surviving Brexit, covid and compliance generally. Having got through this their focus has shifted to improving the customer experience and the value banks can deliver. Banks boards seem to understand the opportunity and are pushing senior management to be more innovative in their thinking – particularly as to where they want the bank to be in five to 10 years and how are they going to get there.
Digital offerings a higher priority
Talking to our clients, bank FX customers are generally looking to their banks to be more focused on using technology to make their life easier – ideally at little or no cost to the end user. This, of course, is easier said than done as what may be good for the bank (low touch/self serve) may not be what its customers are looking for i.e. higher touch / more personalised service.
While banks are engaging with customers about their needs, they are equally under increasing pressure to cut costs. Naturally we are looking to engage with banks with our treasury risk management solution to help drive up the value more cost effectively. But we are one of many fintech’s fighting for the bank’s attention (and budget) right across its value chain for customers.
New client facing platforms emerging
Another of our lessons from London, is we see the larger banks focusing on building new client facing platforms which offer some of the bank’s core functions, i.e. payments, bank balances and FX execution. They are adding on tools that will help customers make better business decisions and hopefully – from the banks’ side – require less direct client intervention and interaction. This isn’t just a London banking phenomenon we are seeing this right across the UK, Europe and Africa as well.
While some are building the solution themselves others are partnering with fintechs to do this for them with either a total solution or cherry-picking best-of-breed. There will be winners and losers both from a bank and a platform perspective but at the end of the day customers will decide whether the banks solution makes their life better and easier – or not.
Summary of our lessons from London
It was really good to finally see that, despite Brexit and Covid, London is back to being open for business and is still very much centre of the universe for fintechs, as a financial epicentre. It was also good to see banks are starting to embrace more digital solutions and working together with fintechs to develop capability their customers both want and need. As the digital revolution takes hold there no doubt be winners and losers, but for now the way forward is looking a lot rosier than the status quo, where UK banks have resided in the past.