Report - Unbundling the Bank: Fintech, Innovation and Banking

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When Dave Birch from Consult Hyperion was first asked to sit on a panel about the impact of fintech disruption he sent a tongue in cheek tweet to his followers to ask if they’d seen any yet.

The event, Unbundling the Bank, was held at Cass Business School on 9 April and highlighted the challenges to true disruption in the banking industry.

Dave Birch's point was around the use of the word disruption and whether the existing fintech industry, for which London is mostly acknowledged as the leading global hub, has disrupted the existing rails on which banking infrastructure sits.

Yet he added that recently announced regulatory requirements for UK banks to provide open access to customer accounts through application program interfaces (APIs) may finally lead to true unbundling as a technological response to regulatory pressure.

Cass Strategy Professor Gianvito Lanzolla agreed that digital technology will make innovation cheaper, easier and likely to happen faster. However he argued that new value curves in financial service markets leveraging a network effect are still likely to lead to one dominant player and a “long tail” of companies that find it hard to scale (as has happened in Search for example).

Jonathan Kramer from Zopa suggested that companies like his can continue growing over the long-term if they build a reputation that enables consumers to trust that, in their case, they don’t need to go to a bank for a loan.

Dave Birch said that the logical extension of that point, and from the observation that banking deposits as a percentage of wealth have been falling for a century, is that maybe, “banks aren’t a place where you store your money, but should be a place where you store your identity.”

Banks, in this scenario, could leverage their strong and regulated procedures for Know Your Customer, with other companies efficiently providing niche services to those customers.

Mutaz Qubbaj from Squirrel, certainly felt that while banks might know who their customers are, it is entrepreneurs who can better understand what those customers actually want. The strength of companies like his, he said, is that they can build products really focused on customer need, unencumbered by institutional bureaucracy, and then work with the banks to implement them (Squirrel is a graduate of the Barclays’ Techstars programme).This suggests a future with much more co-operation between innovators and existing institutions.

Panel moderator Ben Rooney, co-Editor in Chief at Informilo, accepted the point that many bank services might be better undertaken by specialist companies, but challenged the panel that surely it would be easier still to go to a single provider.

True, Professor Lanzolla responded, but need it be a bank - why not Facebook?

The panel agreed that the output on the ongoing digital transformation by banks will depend on the extent to which they are seen in the future as trusted and important by both millennials and, crucially, regulators.

Banks do not seem destined to disappear but their role and relative bargaining/pricing power in the financial services ecosystem will significantly depend on this 'battle for trust' with emergent competitors, often tech companies from outside the legacy banking sector.

The slide presentations from Unbundling the Bank are available from Dave Birch and Prof Gianvito Lanzolla.


Unbundling the Bank was organised by the Cass Entrepreneurs Network and Chinwag. This report was written by Steve Shepperson-Smith of Cass Entrepreneurs Network.

Pic (cc) on Flickr.


Another write-up of the event

Alan Patrick has also written up his takeaways from Unbundling the Bank. Thanks Alan.