You've found us in English! The English version of TechSavvy.media is currently only available in a beta version. This means, among other things, that the majority of articles are machine translated. We hope you'll still want to stick around a little longer

Kim Fournais: The future of finance will be built upon win-win transactions

Microsoft and Saxo Bank’s recent partnership offer a glimpse of the future of bank’s technical infrastructure. The bank is working hard to migrate their entire banking platform to Microsoft Cloud to achieve a both agile and highly secure environment for the bank to accelerate its digital journey.

Executives of industry incumbents are relentlessly focussing on the use of digital technology to radically improve the performance and reach of their enterprises according to a recent report from Microsoft and Quartz.

However, the digitisation of the large organisations is proving to be a double-edged sword. The good news is that technology is the road ahead if financial institutions are to grasp the hard-earned attention of the millennial generation. However, the road is paved with technological challenges as much banking software is built on mainframes in a clutter of technical infrastructure.

That was – partly – the reason CEO of Saxo Bank, Kim Fournais, took part in a panel discussion at Copenhagen Fintech week on Open Banking and APIs. We caught up with him afterwards to get his take on what the financial future will look like.

The sustainable side of capitalism

There are many faces of capitalism in the world depending on your views. But it would be difficult to argue that it hasn’t had an impact on the world today.

“Win-win situations are the reason for our high living standards today and the ability to share ideas and create together. There are many opinions on how capitalism has impacted modern history. Some believe that it is a zero-sum game where the less capable is outmanoeuvred by, the smarter, but that is not what I am talking about,” the CEO emphasised and then presented his view:

“I am talking about a sustainable approach to the world. Where you can run a business because several parties that have an upside in its success.”

“It is difficult to spot win-win situations and it comes down to in the lack of incentive structures in the way we have architected our society. People will do something if they stand to gain. In the same manner, many business models pay the bills but are not structured around a win-win mindset. Some of them offer customers a poorer service than need is due to short-term gains. Those who will have long-term success is those who create value for multiple links in the value chain,” Fournais says.

Regulations: Bringer of change, but impediment to innovation

“There is no doubt that many financial institutions had not chosen to open up their data for third parties unless politicians and authorities had chosen to give their customers freedom over their data. It is a change that has come about due to the new regulation not because the industry thought it would be smart to open the ecosystem and partner with others,” Fournais says.

Running a financial institution comes with many priorities. According to Fournis people rarely understand the burden of keeping with new regulations such as GDPR, PSD2 and MifidII. In his views such initiatives are not always beneficial to innovation, but at the same time, they create important momentum that brings about change.

“To remain relevant in that context, you need to create a change mindset and culture. Means to that end are both leadership and boldness. Furthermore, you most times require partners to create such solutions, and people will only partner with you if they see an upside. So you need to create incentive structures and win-win in those situations,” says Fournais.

Many people talk about fintech, but few do anything about it

Saxo Bank launched the platform in 1998 and in 2001 the bank could on-board its first partner in 2001. Today, Saxo Bank has more than 120 partners globally.

“The market is maturing. Larger institutions are looking our way and they are opening up to the API-economy,” Fournais says and highligths Saxo Banks role:

“We are a facilitator, and we can collaborate and facilitate super services and in a way that scales. Many people talk about fintech, but few do anything about it.”

“In a Danish context, all banks have the same business model where they are pushing sand across the table. Everyone has the same model for investment funds. There are alliances when it comes to mortgages, but if you look at investment- and trading platforms they are virtually non-existent, and most people are only able to buy shares through online banking, and if they want to trade on the global markets the fees are extraordinary. The platforms can get away with that as long as nobody offers a solution. However, you cannot keep relying on regulations and inertia for that status quo to remain. At some point, the famous ketchup effect will come and push all the customers out the door,” Fournais says.

The sum can exceed its parts

“In 1998 we used fixed APIs that allowed us to access other banks liquidity. The point was to offer products that we normally do not have access too. When we launch a new solution and become the best in Denmark when it comes to global fixed income products, then we are not supplying them. We are a facilitator that collect products from the best in the market, package it with technology and distribute that to customers and partners,” Fournais says.

“If we add a flexible model to that mix and give a fintech the opportunity to develop an app to trade on global markets using our technology we are able to offer something not seen before. It is down to modular thinking. Where do the different bits pieces fit and how can they create value together with other solutions, technology and business processes,” says Fournais.

“For me, open APIs and open banking are much more than PSD2. Instead, I think in much more granular terms and down to a particular service or service as a part of a much broader ecosystem. Often it is irrelevant to have a small piece of the puzzle. It is only when the small piece is coupled with other pieces to cater for customers needs that the ball starts rolling, and then you deliver something new and exciting for customers,” says Fournais.

“People recognise that financial elements in and by themselves do not offer much value. It is when they engage with others through partnerships that the total sum exceeds the individual parts. I believe that we are approaching such a future where different elements can create an ecosystem that is based on win-win. The future belongs to those who seek to create value for more than just themselves,” Fournais concludes.

UGENS STARTUP: