FTT Community member, Rita Martins, who drives innovation and FinTech partnerships for finance and risk, at HSBC took part in the MIT Sloan FinTech Conference in February this year. Rita reports on the wide-ranging conference which included keynotes from Square, Robinhood and Blackrock.
Throughout the sessions, some topical themes were discussed that reflect the FinTech industry’s future, from platform models, financial education to investment in ESG start-ups. More importantly and inspiring was the fact that diversity in innovation kept popping up in different sessions, with discussions moving from theoretical concepts to real-life examples on how to walk the walk.
Leadership in Technology
Ajay Banga, Executive Chair and former CEO of Mastercard, discussed the role of Leadership in Technology and highlighted five fundamental principles:
- Embrace technology – The pandemic has created a clear separation between those who have embraced technology and those that lagged.
- Create a sense of competitive paranoia – Create a culture that incentivises everyone to question everything, always.
- Be willing to tolerate failure – Embrace failure and don’t shoot the messenger, “good news should take the stairs, bad news should take the elevator” Ajay Banga
- Create a mixed team – Ensure collaboration between technology SMEs and product owners, instead of keeping technology separate from the business
- Set up aside longevity of money and capital – Able to invest and re-invest in ideas that could fail.
All five principles apply to both FinTechs and incumbent leaders. With incumbent leaders having to pay special attention to culture and celebrating failure.
Platform Company Trend
Lance Braunstein, Head of the Aladdin Product at Blackrock, discussed the notion of platform and why it was part of BlackRock’s direction.
Lance described how Blackrock started an initiative several years ago called “open Aladdin”. This initiative was created due to client demand to pull data from other sources (via open APIs – Application Programming Interface).
The platform concept aimed to create an ecosystem of partners, clients and third parties. Creating an interoperable Aladdin and reducing friction for clients who can access one cohesive set of services and data, i.e. one source of truth.
The platform concept is not only applicable to Robinhood. On the contrary, platform trends will become the future of FinTech, especially as banks start to embrace and widely use Open APIs. As per Lance’s discussion, platforms can provide a seamless experience for customers and increase collaboration opportunities for FinTechs and banks.
Impact Investing Trend
Impact investing is the concept of investing in companies, start-ups or ideas to generate not just a financial return but also a social and environmental impact.
Connie Deng, Senior Associate at Emerson Collective VC, noted three reasons for this new trend:
- Consumers and enterprises want to buy from mission-driven companies
- Employees (especially top talent) want to work for purpose-driven companies
- The cost imposed to third parties (e.g. environment impact) is clearly understood by the market and is being translated into regulation
Especially in Europe, with regulators looking at ESG information, impact investment is not only the focus of VCs but also banks. This new trend was also noticeable in the event’s start-up competition, with most start-ups featured having a mission/social foundation.
Role of FinTech in Financial Education
Jackie Reses, Former Head of Capital and Executive Chair of Square, discussed the controversial topic of the role of FinTechs in regulating user’s investments.
From her perspective, more focus should be put on Financial education and ensuring everyone understands what they are investing in, instead of regulating how people use new technologies.
This is a critical topic in the FinTech industry, especially considering how young generations have easy access to new technologies and Fintech solutions. Will education solve it per se, or is there a role to be played by the regulators to ensure consumers are protected?
Diversity in Innovation
Vlad Tenev, Co-Founder and CEO of Robinhood, noted that leadership is getting more diverse, but it’s an area in which they need to continue to invest, namely:
- Design hiring pipelines and interviews having diversity in mind
- Ensuring new hires feel part of the team and internal practices are inclusive
Ajay Banga, Executive Chair and former CEO of Mastercard, also discussed diversity in his keynote, raising awareness of the fact that more investment needs to go to Women Founders.
“Only 2% of Venture capital went to women founders in 2020, and only 9% went to companies in which women were in the C-Suite of the founding group” by Ajay Banga.
Diversity in innovation and FinTech is a crucial topic in all FinTech events. However, more needs to be done to ensure we are changing the narrative instead of discussing the issues. There is no one solution to this problem. However, as highlighted by both Vlad and Ajay, there are known areas that we know need to be solved, so why not start there?
All in all, the conference was very well organised and raised food for thought. It will be interesting to see how the topics above will progress in the next year and how Manifest (the winner of the start-up competition) scales its product in a world still affected by pandemic restrictions.
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organisations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated.
Rita Martins drives Innovation and FinTech Partnerships for Finance and Risk, at HSBC. See her personal blog here.