Originally published as an interview conducted by Shaun Weston with Kevin Moseri in September 2015. Weston asked Moseri about fintech regulation, bank–fintech collaboration, data and the emerging customer relationship.
This archived conversation records the views expressed at the time. Shaun Weston is the interviewer; Kevin Moseri is the interviewee.
Regulation and innovation
Shaun Weston
To what extent do you think FinTech is hindered by government regulation, and what is being done to allow innovation to flourish?
Kevin Moseri
Regulators often have good intentions, but strict and sometimes unclear regulation can have unintended consequences. FinTech companies have limited track records, which raises questions about their obligations and about how prudential and consumer risks should be assessed. Rapid growth can create its own blind spots.
At the time, I thought the regulatory response was still too uncoordinated. More clarity was needed.
The UK as a FinTech benchmark
Shaun Weston
Is any one country doing more than another in terms of allowing FinTech to grow?
Kevin Moseri
Outside the US, I saw the UK as a leading example. It was attracting startups while government was working with stakeholders to establish the foundations of a FinTech regulatory framework. I hoped other European governments would pay attention.
Banks and regulatory change
Shaun Weston
How could incumbent banks benefit from a revision of financial regulation brought on by FinTech startups?
Kevin Moseri
Greater clarity could level the playing field. The regulatory burden on banks had also helped create space for online lending and alternative finance, producing unintended consequences.
More clearly defined rules could make it easier for technology-driven financial businesses to operate and could reduce some of the cost and uncertainty around innovation.
Why do banks hesitate?
Shaun Weston
To what extent do complacency and apathy play a part in banks not pushing hard enough for innovation?
Kevin Moseri
Regulation is only part of the explanation. Banks also have fiduciary responsibilities, legacy architectures and a low tolerance for failure, particularly after 2008. The difficulty is often the interaction between perception and reality: new technology has to work with old infrastructure while satisfying regulatory requirements.
The decisive advantage would belong to institutions that could turn data, technology and regulation into a better customer relationship.KEVIN MOSERI · EARLIER WORK
Data and the customer relationship
Shaun Weston
What did you mean when you argued that banks should analyse customer transactions before moving towards a fully digital relationship?
Kevin Moseri
Banks need to use customer data to understand needs rather than relying on generic segmentation or simply measuring cost to serve. Better analytics can improve acquisition economics and create more focused innovation.
I also argued that banks should choose areas such as SME lending where their existing capabilities could still provide meaningful advantages.
Collaboration between banks and FinTech
Shaun Weston
How could banks and FinTech startups benefit from working together?
Kevin Moseri
I saw collaboration as the near-term future of FinTech. Banks and startups could build a sustainable ecosystem in which each supplied capabilities the other lacked. Fidor Bank and its open API approach was one example I was following closely at the time.
Data as a competitive advantage
Shaun Weston
Have banks failed to make enough use of the customer information they already hold?
Kevin Moseri
Yes. Banks possess enormous amounts of customer intelligence, but too often fail to turn that scale into a meaningful competitive advantage. The opportunity was to build more continuous, data-informed relationships across customers’ digital and offline journeys.
Followers or leaders?
Shaun Weston
How would you describe banks in terms of being followers, fast followers or leaders in FinTech?
Kevin Moseri
Banks had traditionally been slow technology adopters. I pointed to the FCA’s 2015/2016 business plan, which indicated that only a minority of UK banks had deployed cloud technology broadly and that many had limited plans for customer-facing mobile strategies.
My broader criticism was that too many banks were bolting new offerings onto legacy systems. That approach was difficult to sustain.
What comes next?
Shaun Weston
Which areas did you expect to demonstrate growth or innovation over the following 12 months?
Kevin Moseri
I expected continued growth in peer-to-peer lending, particularly as SMEs explored alternative finance, alongside greater activity in domestic P2P and international remittances. I also expected more M&A activity in FinTech.