Fintech innovations wont come from institutional banking

13/11/2016 romain

Fintech innovations wont come from institutional banking

This October Emirates NBD and ICICI Bank announced a partnership on a project to create a blockchain network for international remittances and trade finance.

This initiative makes a lot of sense in its context. Both Emirates NBD and ICICI Bank are the largest banks in UAE and India respectively. UAE’s workforce is made mainly of workers from India and other South Asian countries. It’s the right combination for such  blockchain 1.0 (crypto currency, remittance, digital payment service) type of project.

The initiative can bring massive benefits to the low income workforce by sending money back home to their families at low transaction cost (compared to current money transfer alternatives such as Western Union).

But can an institutional financial actor disrupt the retail banking?

Back in August, I wrote about the combination between two institutional banking partners – Diebold and Wincor Nixdorf.

The financial industry is one of the hardest to disrupt due to factors like data security, regulation and legacy system. We have to look back 16 years to see a tech company who succeeded in that segment.
In 2000, PayPal pivoted to focus on payment processing. Since then, I haven’t see any Fintech company being able to make a dent on the industry the way PayPal did.

I expect the next breakthrough to come from outside an institutional bank. Someone who understands the problems faced by financial institutions. Someone who has within its DNA what it takes to disrupt and break the status quos. I don’t see that coming from within an institutional bank (except through an acquisition or a technical partnership/licensing).

Recently, the combination between the institutional banking partner Diebold and the German innovation counterpart Wincor Nixdorf happened and shows great potential to make such breakthrough. Thus, positioning itself as the company with the key elements to define and tackle financial technology transformation.

The Emirates NBD and ICICI Bank initiative has a 3rd partner –  a subsidiary of Infosys, EdgeVerve System, to carry out the pilot blockchain network. This seems to confirm my view on the power of innovation left in banks. They were once the leader in IT during the 1st and 2nd disruptive computing paradigm (mainframe and personal computers), but lost their edge and fall behind during the 3rd and 4th paradigm (Internet and Social networks/mobile). Thus, the reason I think banks won’t be the driving part of the 5th: IOT and Blockchain.

Is there another approach to disrupt the banking industry other than acquisition and partnership?

JP Morgan investment bank launched an interesting initiative. They realized they don’t have the manpower nor the culture to disrupt their industry. But they have something Fintech startups don’t have – they know the daily struggles faced by investment banks’ operations. Earlier this year, they decided to open their offices to certain Fintech startups with an “in-residence” program. What could be a better incubator for a startup than sitting at the same table as the workforce that might use your solution. It’s a brilliant approach to emulate disruption through proxies and potentially tie Fintech with their operations. Maybe even be the bank that will define common standards for financial transactions (replacement for SWIFT).

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Romain Tordo is an Infrastructure Architect and Cybersecurity Expert. He founded his IT consultancy firm in Dubai. Romain has 7 years experience as CIO and CTO for two multinationals. Prior to that, he was Head of R&D for a startup in France. Romain works closely with several non-profit organization as mentor, advisor or founder – Emirates Foundation, Jusoor Syria and Coins Cause Change More information about his firm can be found on or his profile on