Was 2016 the bicentenary of fintech?
Tuesday 20 December 2016
As the revolution in financial services gathers pace, David Craig, Thomson Reuters president of Financial & Risk, steps back 200 years to acknowledge the fintech pioneer whose influence is still very much alive today.
Plenty of people are looking forward to saying goodbye to 2016.
They are concerned about a new era of political uncertainty, the ceasing of trade negotiations and indeed the likely return of national regulatory standards rather than international consensus.
For many, then, it has been an uncomfortable year. It has, however, given us a chance to celebrate the 200th anniversary of the birth of the father of fintech, Paul Julius Reuter (photo).
You can read more about him here in our series of bicentenary blog posts. It’s a fascinating history that offers an extraordinary perspective on the present.
Reuter was a pioneer in what we would nowadays call fintech.
His genius was getting news to people around the world efficiently and effectively, making maximum use of the available technology to help his customers build their businesses.
In his actions and with his investment in the vital infrastructure that created the world’s first communications network, Reuter was clearly a man who was not content to sit back and let the pigeons do the work.
He put technology at the heart of his business.
It was the means, not the end. It was the enabler of an interconnected world of greater understanding between nations and the single biggest factor in the explosion of global commerce in the 19th and 20th centuries.
He created a business that is permanently curious about the next technological development, helping to give us the edge over our competitors.
That is as true today. Distributed Ledger Technology (Blockchain), for instance, could conceivably offer a robust way to exchange and record contractual information, including of course financial trades.
This year, for instance, Thomson Reuters has been trialing BlockOne ID, a digital identity solution for blockchain users.
His name became synonymous with the news - it still is today - and he gave our company an inexorable direction providing trusted information to the world using the best people and the best technology possible
Of course, the fintech opportunity has always been greater than any single company.
Reuter showed the way, but that uniquely 21st century approach to commerce - the open platform business - is the best means to harness the proliferation of ideas and opportunities currently emerging from sandboxes, incubators, bootcamps, hackathons and all of the inspiring infrastructure of modern technological development.
The open platform business sees customers as partners, building value together and finding new ways to generate that unique insight from a wealth of robust, reliable and trusted content. It sees new fintechs such as Paritech and Insight 360 leveraging the content and distribution of the open platform accessing customers globally.
We are on the threshold of a revolution in financial services - a findustrial revolution - which promises extraordinary leaps in how the sector operates.
WHO WILL THRIVE?
Disruption comes to an industry when new technology, changing customer demands and new challenges meet.
Financial services is an industry primed for disruption, with rising regulatory scrutiny and increasing cost pressures forcing incumbents to look at different ways to deliver services and a customer base growing up with different expectations.
We’re seeing these incumbents challenged by small, agile fintech companies who use technological innovations to meet customers’ needs in a new way, removing the need for traditional intermediaries.
It forces anyone interested in this market to think: will it be old incumbents that thrive? Or new start ups? Or a combination of both?
Major global changes are creating the right conditions for disruption.
Fintech companies are embracing two major changes that we’re seeing globally - the digital revolution and the changing way we consume things.
Across every industry, country and economy, the vast ability to store information in the cloud, the huge processing power available in our pockets, the desire for consumerism and acceptance of digital - all of these are driving a digital revolution.
Digital news is overtaking print.
We’ve seen the power of digital news in the recent US election.
And, as 10 to 20 per cent of news breaks first on social media, Reuters recently announced Reuters News Tracer, a sophisticated piece of machine learning that finds REAL news by analysing social media in real-time, detecting breaking news fast, ahead of traditional media, but avoiding the errors and noise which is also abundant.
We ourselves at Thomson Reuters crossed the Rubicon last year: we have more users who are machines than are humans.
When we discuss customer loyalty, we have to focus on machines and technologists, developers not just end users. This is a trend we don’t see going away.
At the same time as these technological advances, or perhaps because of them, consumer expectations have changed. The way in which we consume everything has changed - shopping, reading, music, TV, news, data.
And this experience in our consumer lives translates to how we experience things in our professional lives. It is now difficult to separate the two.
Traditional industries like financial services need to respond to these changing expectations, both from the consumer and from business customers.
Would Reuter have seen this coming had he been born today? Undoubtedly.
His name became synonymous with the news - it still is today - and he gave our company an inexorable direction providing trusted information to the world using the best people and the best technology possible.
David Craig is president of Financial & Risk, Thomson Reuters’ largest division. This article originally appeared on Thomson Reuters’ Inside Financial & Risk blog. It is published here with his permission.