Financial Innovation and Technology

Episode Description:

In this episode, we’re joined by Paolo Sironi, who shares his unique journey from banking to FinTech entrepreneurship and to his current role as  global research leader in banking and financial markets at IBM, the Institute for Business Value. In our discussion, he emphasizes the need to understand the human being when innovating in the world of FinTech and banking transformation. He recounts his career-defining moments where he had to choose between doing research and working in customer service, and how this experience shaped his understanding of the behavior of finance and customer interactions with services.We explore banking and Fintech in platform economies. Paolo discusses his experience of creating the risk management architecture methodology for a large Italian bank and how this knowledge influenced his approach to tech innovation.He talks about his proudest moment of writing books, the feedback he received from the community, and how these experiences have helped him make more grounded judgments in financial services. We also discuss platform strategies that can help banks generate more value for their clients, as highlighted in Paolo's latest book, Banks and Fintech on Platform Economies.

Discover how digitalizing value can positively impact society, why bankers are still needed, and the challenges of running a payment platform at scale. Paolo also highlights the role of AI in banking and how technology can empower customers to make informed decisions. In addition, we touch on the potential of quantum computing in revolutionizing financial services, the power of language, and the importance of mentorship. Paolo's unique perspective on these topics makes for a must-listen episode.

3 Takeaways:

1. The importance of understanding human nature and behvaior when adapting AI platforms and services into services like banking
2. Emphasizing of transparency with technology and AI to embolden trust with the public
3. Banking and Bankers are very much alive despite the Bill Gates proclamation of 1994.  Banker / Customer relations are imperative for high value Investments and Insurance products.

Key Quotes:

• The economy is a platform. We should not forget that. Society is a platform where we operate, even politics is a platform. Financial services are a platform. So all of these platforms need to interact. But typically we don't think platforms, we think very narrow or very linear models. And it is that change in perspective that enables us to understand why the financial services platform is not working as it should, and the economy is not working as it should.
• If you think about money, money is there for the survival of the individual. If we didn't have money, I would be in Germany growing potatoes. You would be in the UK still growing your potatoes. Some of my Italian friends would be growing their tomatoes. It would be difficult for us to interact. But now that we have money, I can have work. I can move around easily. I can meet you. And we lost that understanding of the real reason for money to be there. But understanding that enables us to identify the value of money and financial intermediation. And if we identify the value correctly, we can digitalize that value.
• You need to identify what is the value for the consumer. And then once you identify that, you can define how technology enables you to generate that value. Because effectively, without technology, it's difficult to still work on good relationships because they become very expensive in terms of training, in terms of deployment, in terms of execution.
• Every time you need to make a decision in life, typically there's a financial transaction involved. Meaning paying or getting credit where I borrowed my money in order to make it happen. And sometimes that is a complex decision and you have to go back to the bank. You have to think about it, you have to supply a lot of information. If the bank can reduce the friction, that is part of a journey outside banking where banks participate in the journey just by enabling individuals to complete the process, they will unlock new value because the economy, the ecosystem around them will work more efficiently, right, and more seamlessly.Now the problem with this is that how do you get paid for the elimination of friction? In fact, the definition of the contextual banking platform strategy is that the opportunity to eliminate the friction makes banking contextualized, that means embedded, to unlock new value.
• The role of technologies like AI and data, again, is to unlock that value of the relationship that is dishomogeneous, is not even, because many people talk to [too] many clients. So you need to figure out how to help everyone.To get into better conversations where the value is positioned for the decision making process. And that will allow these people to see the value and pay the fee for accessing the advisory platform. So it's a transformation of banks towards trusted advisory institutions. So you will have embedded finance on one side, trusted advisory institutions on the other side.

Paolo Sironi:

Paolo Sironi is the global research leader in banking and financial markets at IBM, the Institute for Business Value. He is a former start-up entrepreneur – focused on digitalisation of wealth and asset management. He started his career as a quant, leading risk management organisations in investment banking. Paolo is the author of business literature about finance, banking, and digital innovation. His latest bestseller “Banks and Fintech on Platform Economies” explores how platform theory, born outside of financial services, will make its way inside banking and financial markets to radically transform the way firms do business.  

For more information:

You can follow Paolo on his  LinkedIn

For more information, thePSironi.com

“Banks and Fintech on Platform Economies” http://relinks.me/1119756979

About the Hosts

Matthew O'Neill is a husband, dad, geek, and Industry Managing Director, Advanced Technology Group in the Office of the CTO at VMware.

You can find Matthew on LinkedIn and Twitter.

Brian Hayes is an audiophile, dad, builder of sheds, maker of mirth, world traveler and EMEA Financial Services Industry Lead at VMware.

You can find Brian on LinkedIn.

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