A Futurist on the Future of Payments – Part 2

Anders Sörman-Nilsson (LLB MBA) is the founder of Thinque, a strategy think tank that helps executives and leaders convert disruptive questions into proactive future strategies. He recently spoke at a PULSE-sponsored event, where he shared insights with financial institutions and processors. We caught up with him afterward to ask some questions. In part 1 of this interview (link), Sörman-Nilsson shares his insights on the payments customer journey. In part 2, he discusses fintechs and the role of community financial institutions in the next decade and beyond:

 

Payments & You: Do you consider fintechs a threat to financial institutions or an opportunity?

Anders Sorman-Nilsson: I think there's a lot of cross-fertilization that can happen between both legacy and innovative players. As a result of open banking initiatives around the world, the APIs of some banks are opening up. In Australia, the government is driving this new regulatory sandbox, where a lot of the data that the banks hold on customers has to be made accessible to fintechs. It’s moving from a competitive space to one of collaboration between fintechs and banks.

 

P&Y: When you work with financial institutions in the U.S., what questions are you asking, or encouraging their leadership to ask?

AS-N: If everyone can be a challenger bank or a fintech that taps into the ecosystem, what does it mean to actually be a bank? Are fintechs just technology companies with a banking license? Does this fundamentally mean that a bank is going to be sort of a “dumb pipe” through which money flows in the background? Does it mean that somebody else owns the customer relationship at the front end with the customer? Is my loyalty really to the bank or is it more to the app? For instance, does it mean that my loyalty is to Acorns (a micro investment app) as opposed to an aggregation that Acorns is responsible for? These are important questions for any financial institution to ask themselves.

 

P&Y: When you spoke with financial institutions, you encouraged them to imagine their future selves. Why?

AS-N: Yes. Imagine that it's 2021 and, on your watch, your bank or credit union went belly up. What were the trends that you missed? What were the signals that you deliberately chose to ignore, and what were the investment decisions that you chose to delay that led to that demise? And, most importantly, what change will you make today to prevent that from happening? Those are big questions that are sometimes uncomfortable questions to ask. However, engaging in this analytical method of prospective hindsight, or a “pre-mortem,” can drive important exponential investment decisions – today.

 

P&Y: Where do you think is the greatest opportunity for financial institutions?

AS-N: Digital knows no bounds, and that's the opportunity here, even for community banks or credit unions that have historically had a very local base of operations. All of a sudden, you can be a digital bank on a national level – pending regulatory hurdles and all the rest. That's also the risk. People in your community, courtesy of digital, are being exposed to new players such as Zelle or Venmo (peer-to-peer payment apps). The idea of having a physical bank account or a bank vault might not be such a meritocratic idea in an age of cloud.

 

P&Y: So where do you see community banks and credit unions fitting in?

AS-N: Courtesy of the Internet, we will get exposed to better ways of doing business and we will get used to everything happening faster, real-time or even predictively. I think banks and credit unions and community banks can play an important role here in solving some major issues. For example, the speed of payments. Demand the typical American to come up with $400 tomorrow, and a large percentage of Americans wouldn't be able to find it – or they would have to sell something to free up that cash. Cash reserves last for only six days according to some studies. So the speed of payment in getting money into your bank account is really important, and that’s a challenge that traditional financial institutions can drive forward.

 

P&Y: Any final thoughts?

AS-N: I think these are exciting times, and I think these are also times when we need to look externally – not just within the banking industry or the payments industry, but globally – to determine what the customer expectation is and what it will be. We know that today's luxury is tomorrow's expectation. Therefore, if we've experienced real-time payments today and it’s seen as a bit of a luxury, tomorrow it's going to be the expectation.

 

P&Y: Thank you, Anders!

 

For more of insights from Anders on the future of business and the customer experience, visit the Thinque blog.

 

For more insights on the future of payments, learn why debit is still important in a fintech world.

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 ANDERS SÖRMAN-NILSSON (LLB / EMBA) is a global futurist and innovation strategist who helps leaders decode trends, decipher what’s next and turn provocative questions into proactive strategies. With an average of 240 international travel days a year, Anders’ view is that the future and the now are converging in a city or start-up near you, giving the curious, the creative and the courageous a competitive and sustainable edge. At the same time, that same future contains fearsome forecasts for futurephobes.

This Swedish-Australian futurist has shared the stage with Hillary Clinton, Nobel Laureates, and European and Australian heads of state. He is an active member of TEDGlobal, has keynoted at TEDx in the United States and Australia, is nominated to the World Economic Forum’s Young Global Leaders in 2019, and was the keynote speaker at the G20’s Y20 Summit in Australia.

His thought leadership has been featured in international media like Monocle, Business Insider, Sky News Business, Financial Review, CIO Magazine and Boss. He is the author of the books Seamless: a hero’s journey of digital disruption, adaptation and human transformation (Wiley, 2017), Digilogue: how to win the digital minds and analogue hearts of tomorrow’s customers (Wiley, 2013) and Thinque Funky: Upgrade Your Thinking (Thinque, 2009).

The views and opinions provided in this article are those of Mr. Norman-Nilsson and do not necessarily reflect those of PULSE or its affiliates. This article is intended for informational purposes, and is not intended as a substitute for professional advice.

 

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