Crypto fever has truly broken: that was a big takeaway this week from the Paris Fintech Forum, one of the biggest annual gatherings of its kind in Europe where 3,000 entrepreneurs, investors, bankers, and regulators descended on the neo-classical Palais Brongniart, once home to the stock exchange. Last year, with Bitcoin and its imitators soaring, attendees jammed discussions on blockchain technology.
With the top 10 crypto assets down 80 percent in the last 12 months and skepticism mounting, many fintech pros concluded that the technology may not be ready for prime time, especially in an industry this heavily regulated. Instead, the conference was about getting back to banking basics. Sessions on building branchless lenders were standing-room only, investors buzzed about how 2019 could be a banner dealmaking year, and the most controversial moment came at a panel on old-fashioned lending.
With Europe’s new payments law now requiring banks to share customer account data with fintech firms, the prevailing vibe was that there’s plenty of action without messing around with crypto.
Perhaps nothing drove that point home more than the face-off between Gottfried Leibbrandt, the chief executive officer of Swift, and Brad Garlinghouse, the CEO of San Francisco’s Ripple Labs Inc. Swift is a 46-year-old cooperative that directs trillions of dollars in cross-border payments between thousands of banks. Garlinghouse has repeatedly vowed to leapfrog Swift’s 1970s-conceived system with a faster, cheaper blockchain-like one.
“I look at the dynamic between Ripple and Swift, and I liken it to Amazon and Wal-Mart,” Garlinghouse said on Wednesday to a packed auditorium.
Leibbrandt countered that for two years, Swift’s latest payment standard revitalized its system, letting customers track a payment like a FedEx package, and cutting transfer time to hours. Unlike Ripple, which has struggled to sign up major banks, Leibbrandt said the world’s top 60 lenders are utilizing its technology, which is already embraced by regulators.
“Banks are not ready for a model where you convert into a crypto and then convert back again,” Leibbrandt said. “It’s not clear to us that blockchain is better than what we have today.”
This week, the hot fintech jargon was “Banking-as-a-Service.” A more apt moniker might be “Bank-in-a-Box”: these ventures create digital versions of products ranging from debit cards to money transfer to account-management tools, which customers can rebrand as their own. Antony Jenkins, the former CEO of Barclays Plc, runs an outfit called 10x that has made inroads in this space.
“We’re commoditizing everything that a bank does,” said Brad van Leeuwen, head of partnerships at London-based Railsbank Ltd., as he showed a menu of offerings to prospects. Railsbank, whose slogan is “Banking in Five Lines of Code,” is capitalizing on the spread of inexpensive open source software and cloud computing.