May 20, 2019

‘Fintechs Are from Mars, Financial Institutions Are from Venus’


Michael W. Kahn

Michael W. Kahn


ORLANDO, Fla.—JP Nicols believes it’s time to “get serious about innovation”—although his definition of innovation might differ from financial institutions’.

“It’s not just ‘innovation theater,’” said Nicols, managing director of FinTech Forge. He described that as opening a “cool new office building with brick walls and pingpong tables and everybody wears hoodies and sneakers.” 

Nor is it “the fintech petting zoo,” which Nicols explained as “some fintechs come up and tell us about what they do, and we sit back and take notes on our legal pad with our gold Cross pen, and nod sagely, and they leave and we go back to doing what we always did, because it seems too out there, too risky.”

So what is innovation in Nicols’ view? 

JP Nicols“Innovation is implementing new ideas that create value,” he told Smarter. Faster. Payments 2019 participants in his keynote. 

“I think everybody gets the ‘new ideas’ part,” said Nicols. “But they need to be implemented. Having ideas on a whiteboard or a bunch of Post-it notes is cool. They need to be implemented.” 

As for how they create value, he sees many possibilities. 

“Are we going to improve the experience, are we going to take the cost down, are we going to improve the revenue streams, are we going to open new lines of business? That’s for you to determine,” said Nicols. 

He urged financial institutions to get better at experimenting. Nicols frequently sees disappointing product debuts, and when he asks if customers were involved in the process, “All too often, the answer is, ‘Not until we launched.’” 

Nicols understands none of this is easy for financial institutions. In fact, he likes to say that “fintechs are from Mars, financial institutions are from Venus. You’re not on the same page. The ‘move fast and break things’ ethos of Silicon Valley doesn’t work very well when you have to operate in a highly regulated environment.”

But Nicols believes it’s possible to balance creativity with compliance, adding it’s crucial to get faster at driving changes, because “if you’re not driving, somebody else is.” His example: financial institutions that launched mobile banking a decade ago versus launching today. “What was once a differentiator that could cause you to gain market share from your competitors,” he said, “now is suddenly just also-ran.”