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Since 2015, we’ve accumulated a wealth of experience and communications with banks from different European countries such as the Netherlands, Poland, Ukraine, the Czech Republic, France, Ireland, Baltic states, and more. In 2016, our hypothesis was that we would jump onto the bandwagon of PSD2 with European banks. We did a bet on this, and, indeed, prepared our platform for this opportunity.
2017 was a year of talking about PSD2 for us. We participated in several hackathons that were held by different banks, talked to C-level bankers, CIOs and CTOs, met with groups of those involved in the digital transformation of banks, made presentations, sent tons of emails, and we drank hundreds of cups of coffee with bankers.
It was a year full of dreams and hopes. Today I can summarize what we’ve learned from the previous year. I don’t believe in European banks as innovative companies ready for the digital transformation that can lead their businesses into the tech-future. And I will illustrate my conclusion with several examples.
First example. I came to a meeting with the digital transformation team of a bank. Beautiful office, nice coffee, screen, projector. I spoke about the platform, back-end, API, product development, and other important topics. A half hour into my talk, I came to the sudden realization that no one in this room (except for me) knew what API was. That was the key issue of my presentation and I talked to people that, as they said, had plenty of experience in product development. But it’s very difficult to communicate with each other if you don’t understand what your business partner is saying. To those of you reading this, I could switch to writing in Russian right now, and, unless you happened to be fluent in Russian (Здравствуйте), this would be what it was like at that meeting with the digital transformation team – we just weren’t speaking the same language.
Second example. We’d been invited to participate at a PSD2-related hackathon. Nearly a year had passed since API should have been implemented by the bank involved and opened to the market. The venue was quite nice, with excellent sound equipment, wifi, catering, groups of nerds (our favorite kind of people!) that came to the event, and speeches from managers of the bank extolling the virtues of their great transformation embracing the digital age. The hackathon started. First, we asked the bank to open an access to a sandbox with their API. We were extremely surprised that they still didn’t have it, and that we would need to do it on the basis of raw data from CSV files.
No jokes here, that’s 100% serious. Raw data from CSV files! We were shocked.
After the event, we spoke to the CIO of the bank and asked him about the API and the timeline of the implementation of the API at the bank. He was confused and he did not know about their plans for it.
Next. You might ask, “Is the situation really so awful?” Not entirely. In Europe, there are also well-prepared banks that will survive in the future. We met with good teams that are well familiar with the technology, know what they develop and support, and do things the right way. Unfortunately, we found this to be an exception rather than the rule.
All that I mentioned above is not even the real problem.
The real problem with banks in Europe is in culture and leadership. Forget about any technical issues. This is nothing in comparison to the cultural trap, and this trap is a panic-ridden fear of failing.
As a manager at a bank, say, your main personal goal is to save your position at that bank – to not be fired from such a good place to work. And the best way to achieve this is to do nothing. Just jump from one meeting to another, one presentation to another, ask questions, make notes, and, ultimately, make no decisions and take no action. You, as a banker, avoid taking any risk in your leadership role. You are afraid of failure and punishment, and so you venture nothing.
If this cultural mindset will not change in the future, our society will experience major problems. I am not talking exclusively about financial services, either. I am talking about something greater, and more fundamental.
No pain, no gain.
So, based on several years of experience and our intense communication and interaction with traditional banks, we decided to apply our focus to FinTech entrepreneurs. They are ready to be the moving force of change, and we will gladly support them on this journey!