FinTech Innovation: It’s About People

FinTech innovation has driven a revolution in financial services that has, over the past year, truly come to the foreground as digital banking increasingly becomes the trusted norm for many customers. From groundbreaking new services in mobile payments, digital currencies, blockchain, peer-to-peer lending, and much,, innovation has long been an important focal point in the digital transformation of financial services.

But understanding innovation is core to that conversation: what makes an innovative service? And, at its most basic level, innovation is really about relationships. There are more people problems than technology problems, and solving those people problems is the core to truly innovative service.

“We speak to a ton of Independent Sales Organizations (ISOs),” said Sebastian Builes, co-founder and CEO of Arcum Partners, in a recent talk at the Chicago Payments Forum. “The portfolios we saw that experience little to no attrition are those who go out of their way to answer questions. Obviously, the question is how do you scale this? Leveraging technology, of course, but that’s a very easy answer for a problem that’s as old-school as it gets.”

And often, it isn’t necessary to create new digital solutions but to offer existing technologies to solve new problems and to deliver them to customers in personal ways. That was the approach taken by Bill Treciak, president and CEO at Electronic Data Payment Systems, an ISO. “We had all kinds of restaurants shutting down when as we went into lockdown,” he said.  “We got out there to set up curbside payments for anyone who called. In many cases, we had to set up old wireless cards so they could have internet service for contactless payments.

It was that personal service and willingness to use any technology available to solve a customer problem that kept retailers running card payments.

Now we see new delivery methods for old services. Take Buy Now Pay Later. Square last week bought BNPL platform Afterpay for $29 billion. It’s a very old concept. “We had all kinds of restaurants shutting down when as we went into lockdown,” he said.  “It’s just digital layaway,” Treciak said.

Builes remembers his grandfather in Columbia splitting payments at a restaurant. “What I’ve started to realize is a lot of these old technologies have been here – I’m scratching my head, wondering how an old product that’s been around for ages becomes the new hot commodity in the market?” Builes said. “A lot of these things have always been with us, it’s only a matter of cultural acceptance.”

Contactless payments using near-field communication (NFC) is another example, Builes notes. The data his firm tracked showed that retailers that with NCF had less attrition during the pandemic when consumers increased their use of contactless payments.  “NFC has been around for a while. The moment in time when it became necessary just never emerged until Covid came along. These trends keep on coming.”

These new digital wrappers for old products can create a new perception of the need for old types of utility, and ultimately, that’s the core for innovative producers. The core needs of customers haven’t really changed – the trick is finding better ways to serve those needs for the long term.