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On to the conversation!
Patrick Rivenbark: JP, thanks for joining us. We’re excited about Next Money Chicago! For those who don’t know you, tell us who you are and all the great things you do for FinTech.
JP Nicols: Yes! I am Chairman of Next Money, a global community dedicated to reinventing finance through design, innovation, and entrepreneurship. We have run great events on six continents and both coasts of the US, but this is our first time bringing Next Money to Chicago.
I spent 20 years helping to grow a small regional bank into a global leader, from a few hundred million dollars in market value to over sixty billion. My last official job title was Chief Private Banking Officer, but what I enjoyed the most were my informal roles in innovation and helping a lot of smart people build and execute on their innovation capacity, and fighting what I like to call “The Business Prevention Department.”
Now my main ‘day job’ is managing director of FinTech Forge, where we help incumbent players in financial services innovate internally and with partners. I’m also a regular host of Breaking Banks, the world’s first global FinTech podcast, and I teach a class on FinTech and innovation at some of the leading graduate schools of banking.
Patrick Rivenbark: Chicago has a fantastic FinTech scene, and you work with Jason Henrichs at FinTech Forge – what do you find unique about the Chicago FinTech?
JP: Yes, Jason is my co-founder at FinTech Forge, and he’ll be on stage with us at Next Money there in his hometown of Chicago on September 26. He has a really unique background as an engineer, an executive, a venture capitalist, and an entrepreneur. He was the co-founder of one of the world’s first digital banks, and he founded FinTEx, the epicenter of the FinTech community in Chicago, and one of the partners.
The Chicago FinTech community is full of in-depth knowledge of financial services broadly, and capital markets and back-office operations especially. There are a lot of people who really understand how all of the plumbing works behind the scenes, not only within individual institutions, but also the connective tissue that connects institutions to one another and to capital market exchanges.
Patrick Rivenbark: The event is focused on 3 Cs – capabilities, compliance, and collaboration. Can you talk about that choice, and why you think it’s important in today’s market?
JP: We start with Capabilities because that’s really what’s been changing the game for banks and credit unions. The rise of FinTech, coupled with advances in technology in general, has raised the expectations of customers, and it’s raised the level of competition within the industry, and from the outside. We also think that capabilities are going to drive the future of financial services too. We are just getting started with new capabilities like blockchain and distributed ledgers, artificial intelligence, and machine learning, and APIs and open banking.
FinTech visionary Brett King will be kicking things off with a keynote on how he sees those capabilities combining to create what he calls “Smart Banking.” We’ll follow that with a great panel discussion led by Ron Shevlin on what he has been calling “Platformification and Intelligent Financial Services.” Joining him on the all-star panel will be Derek Corcoran, CEO of Avoka, Kris Kovacs, CEO of Constellation, and Duena Blomstrom, Chief Growth Officer of Temenos.
Compliance is our second theme, and well, even the coolest technology in the world doesn’t matter if you can’t be compliant in the highly regulated environment in which banks and credit unions operate. We will be announcing a very exciting keynote speaker very soon who will be speaking about how FinTech is changing the regulatory environment, and then we have a panel of experts discussing the shifting sands of regulation that will be facilitated by Nicole Sturgill from CEB. Joining Nicole will be Sam Maule from 11:FS, and Colleen Sullivan from Sullivan Wolf Kailus.
We chose Collaboration as our final key theme because we think the future is less about incumbents versus insurgents, and more about how we can get the best of both worlds through FinTechs collaborating with their more traditional counterparts. There has been a lot of talk about this, but we think very little real action. After another great keynote we will be announcing soon, we will have a discussion led by Lisa Gold Schier from the American Bankers Association (ABA), along with Jim Marous, co-publisher of the Financial Brand, and John Schulte, CIO of Mercantile Bank of Michigan.
On top of all of this, we are also proud to be hosting again the North American finals for BBVA’s Open Talent competition., Marisol Menéndez from BBVA in Madrid and her team will be there, and we will also see demos from up and coming FinTech companies with a fresh vision for the industry. It’s going to be a jam-packed day!
Patrick Rivenbark: Since we have you, we might as well talk trends in FinTech. What segment, trend or topic isn’t being talked about enough in FinTech? Why do you think that and what’s something our audience should know?
JP: I think that FinTech is barely getting started in B2B segments. We have had a lot of solutions come to market addressing the very real pain points of consumers, from lending to payments to customer acquisition, but there is still a lot of work to do with business customers.
First of all, owners and managers of businesses, from small businesses to middle market companies to large corporations, are consumers too. They want the same fast and friction-free kind of services for their business needs as they have in their private life. We’ve already seen this pattern play out, as desktops, laptops, smartphones, and tablets all entered B2B markets from the consumer.
I often talk about the strategic need for leaders to “mind the gap” between what your customers expect and what you’re delivering. You don’t have to be out on the cutting edge – and very few banks and credit unions want to be – but you do have to keep the gap from getting too big. If it does, your customers will be more willing to forgo their past loyalty and try something new with a competitor.
Patrick Rivenbark: Earlier this year you posted Disruption is Already Here and ended with “the need to differentiate has never been greater...” Can you talk about that post? Why you wrote it? Are you seeing anything encouraging in the market?
JP: For literally centuries, the primary differentiator between traditional financial services companies was geography. We have always had big banks, community banks, regional banks, credit unions, savings and loans (roughly the same as building societies in the UK and elsewhere), savings banks, etc., but let’s be honest – they all have pretty much the same products and services and they all follow pretty much the same business models. The difference was you only had a small handful of choices in your town, so the primary differentiator was geography.
Now, industry consolidation has brought most of the biggest and best competitors to your town, and technology has brought nearly every competitor in the world, including some very focused asymmetric new players. I often ask audiences to tell me one word that describes what differentiates themselves from all of their competitors and they usually get it, with an awkward chuckle, when they hear 80% of the room all say the same word – “service.”
Only the very biggest players have an outside shot of being all things to all people. Most banks and credit unions need to really deeply understand their customers and members and their needs, and I’m talking about way more than some superficial demographic statistics and changing their name and the color of their logo.
I’ve seen a few smaller institutions make some brave decisions on who they are and who they aren’t. They’ve begun to double down on more distinctive strategies, and they are beginning to punch above their weight class. Those that fail to differentiate themselves will just be acquired out of existence over time.
Patrick Rivenbark: You’ve recently started teaching at the Graduate School of Banking at the University of Wisconsin – Madison. What prompted you to do this? How are you addressing FinTech in your curriculum?
JP: In 2012, I started talking to my friends at the Pacific Coast Banking School, held at the University of Washington in my hometown of Seattle. I told them that they do a fantastic job of teaching the future leaders of the industry the best practices developed over generations, but I asked who was teaching them the next practices.
I created a curriculum for a class that would give their students a broader view that many of them just don’t see in their day to day jobs, and I teach them how to use some innovation tools and frameworks so they can create a better future for themselves. When we launched it at PCBS in 2015 it was the first class of its kind in the world, and it was an experiment.
The experiment paid off, and it has now become one of their most popular classes. I have since been invited to teach it at the Graduate School of Banking at the University of Colorado and yes, at the Graduate School of Banking at Wisconsin. I am honored to be a part of the stellar faculties of all three institutions, and I love my time in the classroom.
Patrick Rivenbark: The Next Money Chicago event is certainly got a lot of the who’s who in FinTech. What do you look forward to most at these events?
JP: I always learn something new from the stage, but what I really love is seeing old friends and making new ones. We build in ample time for networking at our events because many people tell us that’s what they value the most, and I agree.
Patrick Rivenbark: How do you and the team approach keeping these conferences fresh and engaging?
JP: There are so many conferences for people to go to now that this is always on our minds. We focus on curating really great speakers and great content. We have all been to too many conferences with boring talking heads and corporate drones essentially parroting their PR spin, and we work hard to avoid that.
The other thing is that Next Money is really more than a conference, it’s a community, and we work hard to nurture that. I always love hearing when a group of friends or business partners tell me they first met at a Next Money event.
Patrick Rivenbark: I always like to end with this one, what’s something you’ve changed your mind about in FinTech in the last year?
JP: The more I have learned, the more I have become bullish on APIs and the concept of Open Banking. I first thought it was going to be most relevant in Europe where the regulators are mandating that banks open up their data through standard protocols. I think that’s still true, as the regulators have eliminated any natural reluctance from conservative bankers.
But what I’ve changed my mind about is that Open Banking is going to be the global norm at some point in the future, even in the US where regulators are less likely to play the role of instigator. In the US, it will be driven by the most forward-thinking institutions. Most of us couldn’t dream of owning a phone without a broad selection of applications tailored to our needs, and we’re going to say the same about our bank before long.
It pains me to say that Ron Shevlin helped change my mind about this, but he’s been talking about “platformification” for a while now. He’ll have a lot to say about that at Next Money Chicago too, and I’m sure he’ll call me out for overcoming my skepticism.
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