Do Cool S*it

I’ve been reading recently an interview with one of the big banks CEO, saying, essentially, that fintech startups have no chance of success, as banks have both the resources and the know-how to change themselves, flawlessly execute their digital transformation plans, and leave all startups eating dust.

Of course he is right, as it is common knowledge that the higher your salary the higher your IQ, and since senior bankers make by far the most money, it is obvious that they are also the smartest.

It also plays to the tune “banks have always had the most advanced IT”, which has been of course correct for so many years. As one of my bank executive colleagues told me, he has been doing “fintech” and “big data” since 25 years ago.

What can go wrong, you would ask. As it happens, many things can go wrong.

First, and I wrote many times about this, is that the philosophy “all the smart people work for my company” has proven, again and again, disastrous. There is even an innovation management theory called “open innovation” that describes, and proves it scientifically, that the path to successful innovation goes through connecting and collaborating with pretty much everyone. And that does not include arranging meeting with startups to “catch up” – what I call with good arguments “fintech espionage”.

Second, how do you know what to work on? You may think that by allocating 1000 people to work on fintech you have the problem nailed. Not so fast. There are over 4000 fintech startups, employing over 30,000 people. Around the globe. And they survive through a market-driven genetic algorithm – permutations drive success, as no one knows from the beginning what will work. CB Insights has charted just the most successful ones, and it’s quickly becoming  a very busy chart.


Such an open process is totally at odds with the executive-driven resource allocation in a bank, innovation team or not. As I like to say, decisions on what to work on are always made by the highest paid executive in the room – see paragraph 2 above. I have stated many times that the chance of being successful with a digital transformation program done completely in-house is 50%. At least the good news is that the ones that succeed can get similar higher paid jobs at the next bank, where usually the odds catch up with them.

There are always the options for a bank to create an “innovation team”, setup a “digital lab”, sponsor an “incubator”/”accelerator”/”bootcamp”. Maybe even run a hackathon. Startups flock to them, PR gets into high drive, congratulations all around. And still, nothing meaningful happens, no change, no visible digital transformation. At some point, fintech startup founders will realize that they perform a brain dump for their corporate sponsors for $30k and a chance to be in the limelight. As I said before, just a more subtle form of fintech espionage.

All these attempts do not change the fundamentals of innovation and technology-driven accelerated change. I wrote and spoke many times about how humans cannot conceptualize constant increase in acceleration, as the physical world has no equivalent to it, to anchor our understanding of the concept. We see it only when we experience exponential growth, which is the end result. And because of technology advances, any large organization, bank or not, cannot keep up with the rate of change. If all advances would stop now, or at least slow down (negative acceleration), superior resources and more people working on a task/project would trump outside innovation. So our very senior, very smart, outrageously rich bank CEO at the beginning of this post would be right. Fintech startups would have no chance.

Lucky for us “no chance” guys and gals working in startups, technologies change fast. Very fast. Faster. Faster. And only startups have the small nimble org structure to adapt. And if this means that existing business model will be destroyed in the process, the old structures/organizations/companies will disappear. Will be “disrupted”. More like “obliterated”.

I am definitely not saying that all fintech startups will succeed. I am painfully aware of the daily challenges a startup has to overcome for years to become an overnight success . But we are onto something, and the financial services will either adapt and work with us and show that they are “antifragile” (see Taleb), or be gone in the industry’s potentially coming “Kodak moment”. Poof!

Fintech startups have the unique historical opportunity to change financial services today. Money has long ceased to be physical, it’s all bits today. And the industry earlier success in adopting information technology may have created the premise for its demise, as all the fundamentals of accounting and money movement is digital today. Startups have to do only one thing, and do it well — work on cool s*it (see Miki Agrawal). Like what Moven has done for TD Bank in Canada — TD MySpend is Moven’s cool technology similar to what Moven US banking customers have access to.



Some fintech startups will fail, some will succeed, but collectively they will change the world of banking.