The View From Europe

We had the privilege to attend and present at EXEC Conference in Berlin last week. In an ideal location and surrounded by great company, we observed a rational, results oriented ecosystem that offers plenty of lessons and observations for the broader market.  Here’s what we learned:

PSD2 Matters

PSD2 was mentioned on nearly every panel. The law may not be implemented until 2019, but it is already encouraging innovation in the FinTech and Financial Institution landscape. Financial Institutions are not trying to stop it, and FinTech companies are seizing on the opportunity to collaborate with Financial Institutions under PSD2.  (Note:  I am sure that the sausage making behind the scenes is much less collaborative.)  Examples of the collaboration are evident in the number of API service providers represented; Financial Institutions with “at-the-ready” APIs and Fin-Tech companies such as Figo and N26 charting new business paradigms.

Framework-Based Discussions

The dot com bubble taught me that data should drive decisions, and strategic frameworks can uncover exciting & otherwise invisible opportunities. Lately, the US tech market feels more like a reality tv show than a real framework-based industry. At the EXEC conference in Berlin, high-level strategic frameworks were front and center, with panelists and keynote speakers displaying “value chains” to contextualize their arguments. Particularly in the Fintech eco-system, value chain analyses reveal multi-billion dollar opportunities, and help Fintech companies focus their resources strategically. This brings me to N26.

N26’s Model

One of the first keynote speakers opened with a simile: financial institutions today are like frogs boiling to death in a pot of water: the clock is ticking for them to innovate or boil. N26, a relatively young bank based in Berlin that has raised over $50MM, presented some important lessons that can help FinTech startups and incumbent banks avoid boiling. N26 has two notable differentiators: Design & Platform. On the design front, N26 wanted banking to be beautiful.  As their founder noted, 7/10 millennials would rather go to the dentist than their bank. N26 makes banking a beautiful experience, a quick way to draw in young clients. But beautiful design is easy to replicate; N26’s staying power is all thanks to their platform. While big banks are bogged down by legacy systems, N26 leverages best-in-class providers like TransferWise to provide non-core banking services, such as transfers, lending, credit and more.  N26 is a platform bank, with the potential to become a marketplace replacing the end-to-end ego of traditional banking with an adaptable tech platform for changing times.

When we stitch together these three observations, we see a bright future for TradeIt, as we build, manage and distribute APIs for the spectrum of investing firms. At the same time, we recognize that rescuing frogs out of boiling water will inevitably leave you with a few burn blisters.

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