The ‘Uber moment’ of the financial industry is taking shape

The former Barclays CEO, Antony Jenkins, recently spoke at the Royal Institute of International Affairs, an independent policy institute based in London. In his speech, Jenkins described a recent trip to Silicon Valley, where he spent time with VC’s and entrepreneurs involved in the FinTech sector. “In every coffee shop or restaurant, it seems there are twenty something founders talking to thirty something investors about seed funding,” he reminisced.

“It appears to be casual and laid back, but it is at the same time a ruthless meritocracy where the best ideas win.”
— –  Antony Jenkins, former CEO at Barclays

During his three years at the helm of Barclays, Jenkins oversaw the creation of a startup accelerator programme to find innovative fintech solutions.

The Barclays Accelerator provides a three-month intensive programme powered by Techstars, a US-founded tech accelerator. The programme supports new businesses, and helps them to create innovative solutions in FinTech. “I realized that financial services needed to embrace technologies, not reject them,” Jenkins explained.

The 2015 Barclays accelerator has completed London’s Cohort 2 and New York’s Cohort 1, with applications open for Tel Aviv and Cape Town.

Among the many startups that have gone through, there are a handful of blockchain inspired companies, including; Everledger, for diamond transaction history verification for insurance companies; Atlas, which provides consumers the opportunity to spend their bitcoin using a debit card; Safello, a European focused Bitcoin exchange; Chainalysis, which is building a layer of compliance and networking for the future value of exchange on the blockchain; Wave, that will focus on Bills and Lading for the shipping industry.

“My aim at Barclay’s was to make it the most technologically savvy and automated bank in the world.”
— – Jenkins

Jenkins was ousted from Barclay’s in July. However, he still displays a keen interest in technology and how it can disrupt the current system. “It often has a hugely positive impact on the way we live, the way we work, the way we consume and the way we learn.”

The former CEO refers to the current banking industry as being a vertical market, where the needs of a specific group of people are catered to, as opposed to a horizontal market which focuses on a large group of people. “Banks were too aggressive, too self-serving and too focused on the short term. The impact of these mistakes is still being felt. We have seen public trust in the industry sink to an all time low.”

Jenkins believes it is time for an “effective, fair, and transparent financial services sector” which is “vital for economic growth and also for a functioning and healthy society.” He further explained that is especially true, “as the industry itself has not always delivered its side of the bargain.”

The former CEO predicts that over the next 10 years, there will be a number of significant disruptions in financial services. “We will see massive pressure on incumbent banks which will struggle to implement new technologies at the same pace as their new rivals.”

This, explained Jenkins, will make it increasingly challenging for financial institutions to deliver the returns and profitability that their shareholders continue to demand.

“Ultimately those forces will compel large banks to significantly automate their businesses.”
— – Jenkins

While in Silicon Valley he was able to witness how technology is truly able to target complex institutions such as financial services, healthcare and education. He foresees what these industries are about to go through, “Let’s call them ‘Uber moments’ driven by companies in the so-called FinTech sector.”

Uber is the peer-to-peer transport company founded in 2009, which globally disrupted the taxi industry. The company is now valued around US$50b. According to Jenkins, this service demonstrates how the digital revolution is making many aspects of our lives easier, and an Uber moment starts with disruption. “It needs to dramatically improve the customer experience,” he said. “Or it can create a whole new customer experience that didn’t even before as in the case of Facebook.”

Taking into consideration the evolution that can be seen from the publishing, music and transport industries, a pattern emerges. “It begins with a small group of founders using new technologies, such as mobile phones and fast data networks, to dramatically improve or disrupt  a so-called ‘vertical market’ that is focused on a single niche.”

It isn’t just about the money either, as Jenkins stated in his speech: “If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008.”

It appears that The Bank of England also sees this as a worthwhile approach. The institution recently announced a competition focusing on ideas that make a positive difference to society, and not solely on banking.

“The Bank’s mission is to promote the good of the people of the United Kingdom by maintaining monetary and financial stability. The chance to contribute to society and make it better for everyone is a big reason why a role with us is so rewarding.”
— – Bank of England

The site for the competition provides examples of blockchain technology already underpinning different projects such as Factom’s new land title registry system in Honduras, “so people can prove they own the land they’ve bought.”

It also references the ability of universities to store and encrypt student qualification records on the blockchain, so that employers can verify the authenticity of a resume. In Argentina, a blockchain company which focuses on validating financial transactions, BitCourt, recently constructed a blockchain solution tackling this problem for CESYT, an Argentinian College.

Lastly, it describes Everledger, which is“helping insurance companies crack down on fraud and theft by giving diamonds “a digital fingerprint,” creating a public ledger that tracks the origin, sale and ownership of the world’s most precious stones.

And there are many more novel applications states the Bank of England. From how we identify individuals or verify the provenance of organic goods, to managing car leases or decentralising crowdfunding services.

“The point is that while the technology might include some risks, there are all sorts of far-sighted, game-changing, life-enhancing ideas to pursue.”
— – Bank of England

The competition is geared towards students in the UK, however international students will also be considered if they wear the additional costs of travel etc. The bank is encouraging creativity with submissions, but will limit entries to 500 words of text, 10 powerpoint slides and videos must be under two minutes.  Entries close on the 7th December.

The winners will receive an exclusive invitation to visit the bank where they will be able to meet people involved in the Data and Technology Team. “You’ll win a six-week paid internship if you’re in your first, second or penultimate year of study. Or if you’re in your final year, you’ll skip the initial stages of the selection process and be fast-tracked through to our graduate programme assessment centre. Either way, you’ll boost your chances of landing a role with us.”