ID Finance: the banking industry is in the midst of a new industrial revolution
Banks.eu continues a series of interviews with top managers of European financial institutions to unveil all details of their work in Europe and find out their plans for the future. This time, the portal interviewed David del Pozo, chief financial officer of fintech company ID Finance.
After completing a university degree, David began his career working as a dealer, before moving on to the creation and management of a number of different treasury departments in a number of different banking companies. Finally, he reached financial management positions in entities such as Inversis and ING Direct Spain.
He came to ING Direct Bank in 1999 and had worked in the company until 2012, holding a number of managerial positions. From 2012 to 2013 he was Chief Financial Officer and Chief Risk Officer in Inversis Bank, then he worked in consulting. As part of the global growth strategy of the international fintech company with Russian origin ID Finance, David became chief financial officer in August, 2016.
- Why do you think that a large number of ex-directors from the banking industry are moving to FinTech companies, either as investors or even as founders? In your case, what made you decide to swap traditional banking for the FinTech sector?
- We are in the midst of a new industrial revolution, and breakthroughs in technology are creating waves across a huge number of sectors, including the financial sector.
New skills and abilities are needed in this sector, which can only be acquired by working in those corporations that make up part of the paradigm shift. While some banking entities are adapting, insofar as they can, to their greatly changing environment, it is the FinTech companies that are creating this environment, transforming it, and therefore they have a better understanding of it than anybody.
I decided to switch to working in the FinTech Sector because I want to be part of a company that is leading this change. My experience at ING Direct was extremely enriching in this regard: It is a banking entity at the forefront of financial innovation and customer management, and that is why I decided to make the leap to ID Finance (Innovative Digital Finance), where innovation can be found in the company’s very DNA.
- Do you think that new technologies, for example Blockchain will play an increasing role in coming years? What role could it have in ID Finance?
- Blockсhain is one result of the change to the way in which we make transfers. When bartering, goods are given in exchange for other goods, or in exchange for services. With paper and fiat money, the exchange is between cash for goods or cash for services. In the digital age, exchanges for goods and services can be done with computers, mobiles, tablets…
Now that the combinations of methods of payments are so global and diverse, we need a system for transfers that is both secure and transparent. In this sense, Blockchain will have an increasing role, which is directly dependent on the increase of virtual money and the acceptance of its value.
- Do you think that FinTech start-ups have the advantage when it comes to innovation, in comparison with traditional banking, given the bureaucratic structure of the latter?
- Yes, absolutely. Banks, after successive mergers, are characterised by their size yet, like any giant, they have difficulties mobilising quickly and innovating. In contrast, FinTech companies have learnt and can put their knowledge into practice; they are characterised by their lack of cumbersome technological and operational legacies, thus are able to swiftly position themselves at the forefront of the sector. Furthermore, they can handle exponential growth while maintaining their organizational structure, taking on the essence of an organization with no baggage, being able to evolve and adapt quickly to meet their customers’ needs.
- Is there an opportunity for banks to converge with the growth of FinTech start-ups, or is it simpler for them to acquire them, rather than innovate?
Convergence happens precisely because of FinTech acquisitions. Although a priori it might seem paradoxical, its easy to understand.
A traditional banking entity has two options: The first is to adapt and adopt the Fintech philosophy (thus becoming less obsolete), a process, which requires time, a struggle against internal resistance, and the spending of significant resources. Leading, in some cases, to a frustrating divergence, instead of a convergence. When faced with all of this, some banks prefer to invest in a FinTech company with potential, partially integrating it among the services offered by the bank.
- What do you think about banks becoming platforms made up of FinTech companys’ products and services?
- It is another natural response to an ecosystem of efficient integration of FinTech start-ups into banking entities. Banks will become “marketplaces” that offer their brand and, perhaps, back office for the development of those innovative products and services demanded of FinTech by its customers. The need for profitability of some banks in the future could mean that they shift to managing the platform while another company is focused on managing the product.
- Do you think that FinTech will replace banks, or supplement them?
- I’m no guru, but that kind of replacement seems like quite a stretch of the imagination at the moment. I think that in reality the options are more diverse: Perhaps we might aid in a variety of complementary solutions, with customer needs and technological possibilities becoming the decisive factors in determining winning combinations thereafter.
- Do you see banking entities and FinTech companies as enemies or allies?
- I definitely do not think they are seen as enemies; they are more like allies, or necessary collaborators. The idea of enemies is more in line with the concept of having a cake that must be divided up amongst everyone; in reality a more accurate description of the dynamic is that the more we work together and can offer our customers, the more the cake grows.
Previous interviews can be found here:
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