Fintech University (2): Regulation, a key piece in the transformation of the banking sector

“Regulatory bodies aim to protect consumers and avoid risks, so they are slow at decision-making. Fintech companies are flexible, agile and need speed to validate their activity”, says John Collins, a member of BAFT (Bankers Association for Finance and Trade).

During his talk at the course organized by BBVA Fintech University, Collins –an expert in regulation and compatibility in matters related to bitcoin– focused on the way in which regulations and standards affect fintech companies.

The advice of this expert is not to allow the need to be competitive in the short term intervene in long-term relations that will lead to the creation of a new space. “On this point, the collaboration between governments, traditional banks and fintechs is crucial for creating a new financial environment”.

Liquidity is digital

The need to make payments in the quickest and simplest way was what made BBVA Compass join forces with Dwolla to reinforce its real-time payments system. Ben Milne, the creator of this fintech, sees banking transactions as an API which has automatic authorization from the bank.

In his opinion, “Contrary to what many people think, banks are at the core of this scenario”.

Ben Milne said that it was not a question of replacing the old banking sector but of streamlining the connection. “The new payment platforms are creating more negotiable rules for relation and commitment among banks and customers. Innovation is global and fast, whereas regulation is local and slow. There are challenges to be faced, but everything that is not yet digital will be”.

The new banks

Mark Mullen of Atom Bank, Valentin Stalf of Number26, and Johan Lorenzen of Hoolvi talked about the focus, orientation and realities of the financial industry, which has been turned upside down by the fintech companies.

Mullen, co-founder and CEO of AtomBank –in which BBVA has a 29.5% stake– is the first mobile access bank to obtain a license in the United Kingdom. “We decided to be a bank, because it's simpler from the regulatory point of view. You don't have to be a banker to be in fintech, but it helps. Technology has a massive impact on banking, but understanding the traditional business is also important”.

According to Mullen, the end user only wants a transparent relationship with services understood as a platform. “They don't care where the technology used to create the products and services comes from, in the same way that someone who buys a car doesn't care who made each of the vehicle's components”.

Valentin Stalf, founder of Number26, noted that his fintech was born out of a feeling of disaffection with the banks and their way of doing things. Today they aim to become the first European online bank and have captured 60,000 new users in the first quarter of 2016.

“Our name refers to the 26 small cubes that in turn make up Rubik's cube. In the same way, if you have the strategy to solve it you're sure to succeed. If not, you'll get lost. There are many small pieces which need to be moved in just the right way”.

Stalf noted that people commit to new ideas “if they bring satisfactory user experiences”.

Finally, this last fact was corroborated by Johan Lorenzen from Hoolvi, a fintech acquired by BBVA in March. “We are highly focused on the customer. Everything we do has to do with them”.