If you believe the hype, everything is being Uber-ized. But has financial technology had its Uber moment?

That was the topic of discussion at one of the Economist Summit’s panels earlier this week that brought an incumbent financial institutions and technology veteran together with a startup. The latter was Wealthsimple, co-founded by COO Brett Huneycutt, who hails from south of the border and is focusing on disrupting the wealth management industry.

He believes the Uber moment has come, but it’s important to ask what that means. As a long-time user Huneycutt identified three traits of Uber that he sees as being significant and relevant: it revolutionized the consumer interface to order a car, changed the back office operations of the traditional taxi industry, and showed how quickly a business model could be scaled up after incubating for a year in San Francisco. “Finance has to learn from Uber.”

Cameron Fowler.
Cameron Fowler.

But Cameron Fowler, group head of Canadian personal and commercial banking at BMO Financial Group Group, doesn’t entirely agree. “I don’t think this is an Uber moment. It’s customer moment,” he said “Disruption is this space is a good thing.”

Equating the banking industry with the taxi industry is not a good comparison, as the latter has historically offered a dreadful customer experience, and while the financial services industry in Canada has issues, it is consistently ranked No. 1 worldwide by Cap Gemini. In addition, across the country, there 80 banks competing. “There’s not going to be one winner in this game.”

Fowler does agree with Huneycutt that Uber has changed the game in terms of offering a beautiful and efficient experience for the user that is digital all of the way through. “The battleground is customer experience,” he said. “There are parallels to be taken from Uber, but this isn’t the moment.” The finance industry requires a great deal of trust and ability to work in a regulated environment, and BMO is its peers have its eyes wide open, unlike the taxi industry. “We feel the disruption now.”

The closing of physical branches and the debut of Apple Pay in Canada are examples of this disruption, said Fowler, and also a sign that traditional hierarchies in Canada’s banks in are crumbling. BMO is now prioritizing mobile over the call center when it comes to its focus on customer engagement and fast release cycles.

IBM Canada president Dino Trevisani agreed with Fowler that there is a great deal of difference between the taxi and banking industries, but also sees fintech companies being able to offer a lot of value within their particular areas, and that the side effects of Uber are putting banks under a lot of pressure. “That pressure is critically important to driving transformation in the banks,” he said. “If the banks don’t transform they will have their Uber moment. They have time to make that transformation.”

Trevisani said IBM is working both ends of the spectrum by helping both large banks and small, innovative fintechs, which need support to scale up, while banks need to understand how they can create an innovation culture so they can adapt and transform themselves more quickly.

Huneycutt said there a pros and cons to being a startup in Canada, fintech or otherise. “We have incredible access to talent here.” It’s easier to recruit, he said, because there’s less competition than in Silicon Valley, home of the Googles and Facebooks. However, in San Francisco, there a culture that tolerates failure as part of the learning process; less so in Toronto.

From a bank perspective, Fowler said the industry has been slow to go digital. “Part of it is there is no real reason to do so.” Innovation in the payments area, for example, has been quite low here, and technology such as blockchain is just getting going.

There is plenty of opportunity for collabopration between new entrants and the traditional banking companies, said Huneycutt. In fact, it’s essential. Wealthsimple’s partnerships with established companies provide it with distribution channels and credibility. Fintechs are able to attract talent and iterate quickly, while the big banks have the data. “I think we’re both afraid of one another.”

Added Fowler: “This is a better together scenario.”

Share on LinkedIn Share with Google+
More Articles

  • Great article Gary! As a former banking technology professional, member of CBANet and the network team that developed Interac bank networks, Wealthsimple may not be ‘uberizing’ the financial sector, but Blockchain technology certainly will! Folks in the Canadian financial sector just want to keep their heads in the sand and hope they don’t get blown away during the storm!

  • Responsive

    I am not sure I agree with the comparison to Uber, which is usually used as a reference to the sharing economy. Also, Wealthsimple is actually very, well…, simple. The service takes a basket of low-cost ETFs that it rebalances for you periodically wrapped up in a slick user experience and also drives costs down to the lowest amount possible. Totally amazing and I believe is the best option available for Canadians in you are looking for a passive investing strategy with the aim of achieving market returns.

    In contrast to Wealthsimple, my company Responsive Capital Management aims to beat market returns via artificial intelligence and tactical asset allocation.

    Consumers have higher expectations now thanks to Amazon, Netflix, and Google and Apple. Investors are asking – If Amazon can recommend you products it knows you want, If Google have cars that drive themselves, and Apple has put an executive assistant in your pocket, then why isn’t there something that can exceed market returns?” Responsive uses research, statistical analysis and machine learning as parts of its artificial intelligence and uses more than 100 economic and market signals in order to adjust client investments.

    Gary: Given the opportunity, I’m keen to talk with you about the next generation of robo-advisors powered by big data and AI. I can be reached directly at davyde@responsive.fund

  • Michael Sneddon

    Sometimes with financial services it’s about being shown the hidden costs that aren’t so obviously. That’s why we are the only Toronto mortgage broker service to show people the hidden costs buried in their mortgage rates upfront – check us out at http://www.GTAMortgagePros.com