Fintech Disruptors: What are the dominant themes and growth trends in financial technology today?
Ilkka Korkiakoski: Instant, real-time payment will change the payment landscape. We are noticing fintech companies entering those areas where friction appears in the value chain and the customer experience is not ideal. Open banking and instant payments are driving new types of technologies such as blockchain and analytics. The banks are seeing that this kind of digitisation is profoundly changing the landscape and are embracing collaboration with fintechs. The regulators are also forcing the landscape to change, with PSD2 and SEPA two important drivers for instant payments.
Fintech Disruptors: As one of the ‘old guard’, what is Tieto’s role in the new environment?
Ilkka Korkiakoski: For me Tieto’s role is two-fold: when banks look at industry players they are torn between what is new core and what is old core. Disruption is forcing them to look at what they want to do, creating opportunities to work more closely with partners. Tieto has been in financial services for fifty years. In the past we’ve been seen as an IT player but now the company is positioning itself as a business partner – a specialist in enabling renewal. In a world that is more platform-driven and where infrastructures and services are converging, we are integrating and creating a platform approach instead of keeping separate product portfolios.
Fintech Disruptors: How do you see the future?
Ilkka Korkiakoski: Looking five ahead, any player that has traditionally been servicing large banks, insurance companies and other financial institutions need to take a stand if they want be part of the value chain. In my opinion that is the end game and Tieto has decided that we want to be a partner in the business, not in IT, and that could mean that we have to be licensed, take risks and share them with customers by offering banking as a service. The banks is a skeleton and everything they need in order to operate would come from us, so that the platform is provisioned on a transaction basis and the banks knows how the business model works. This model will be mainstream in five to ten years’ time.
Fintech Disruptors: What is Tieto’s roadmap to success?
Ilkka Korkiakoski: We have for several years been transforming industry products into platforms and will be investing more in this area. We are also introducing more analytics and tech into the platform. Looking at the payments market, the transaction business is becoming extremely important and our focus is on attaining efficiency in transactions processing.
If you don’t have a value add in your platform, e.g. analytics, how can we create a highly visible, trusted network? We are looking at blockchain and working with a number of partners such as Ripple and experimenting with other value-add initiatives.
Cash management, for instance, is costly and rigid. Today’s bank model is not matching the expectation of corporates – they want a platform that accommodates a number of different use cases. In 2016 we acquired the leading Nordic lending and software company Enriq/Emric to enable us to provide a one-stop-shop.
Fintech Disruptors: Does the existing culture tolerate risk?
Ilkka Korkiakoski: We have had strong partnerships with banks and providers of financial services in the Nordics for many years. When you are really operating in symbiosis your customers you need to adapt and transform all the time. The Nordic region has always been a technology friendly environment and it is geared for change.
The industry is now global – if you want to compete on the global stage, you need to be agile and have a change culture in your DNA. We are used to operating in a multi-country environment but the Nordic banks, which have been more regionally and locally focused, have a greater challenge as innovation is no longer confined to a country’s borders. Banks that have traditionally been serving local customers, have invested in internet and mobile banking, but they are still relationship-driven.
Fintech Disruptors: What separates the really successful Nordic fintechs from their peers?
Ilkka Korkiakoski: Tink in Sweden is a good example of a fintech success story. They address personal finance management and how a customer would know what they’re spending, when and how. They’ve reverse engineered the mobile apps to see what protocol the banks are using, enabling transactions to be retrieved from the banks. Tink also uses AI to predict future spending patterns.
Fintech Disruptors: What are the biggest opportunities?
Ilkka Korkiakoski: Now with PSD2, it will become easier and open up more opportunities for experimentation. The attitude is now more collaborative and I predict that banks will do what the regulator requires. We will see the real business impact in three or four years’ time.
Fintech Disruptors: The war on talent
Ilkka Korkiakoski: There is a talent issue, a serious one, and what we see happening with the digitisation of business, banks need to develop new technologies and are hunting the same competencies as tech firms and fintechs – creating a talent war.
IT consulting is an old market. In the new era of consolidation, we are seeing more acquisitions in the payments software market. However, it is still a mystery to me that banks are still employing huge internal IT resources, mainly to maintain their legacy systems.