The Future of Fintech: Customer Centricity Fuels Innovation

STEVE HENDERSHOT

The fintech revolution is here. But its ability to truly go mainstream hinges on pairing all that cool technology with a customer-centric mindset.

MICHAL RACZKA

The role of project leaders and product teams is to serve the customer. Create a short feedback loop cycle. Innovate on behalf of [the] customer. Take care about business delivery, [which] means that [the] best project management practices can accelerate iteration and shorten time to market.

NARRATOR

The world is changing fast. And every day, project professionals are turning ideas into reality—delivering value to their organizations and society as a whole. On Projectified^®, we’ll help you stay on top of the trends and see what’s ahead for The Project Economy—and your career.

STEVE HENDERSHOT

This is Projectified^®. I’m Steve Hendershot.

Financial services customers—particularly younger ones—are flocking to tech, with global cashless payment volume set to increase more than 80 percent by 2025, according to PwC. And that means financial services companies are getting serious about delivering the kind of UX (user experience) that keeps all those new digital converts—and even brings in those last holdouts. Global fintech investments have already hit 91 billion US dollars so far in 2021, per a recent CB Insights report.

The project teams making it happen are working in what is, no doubt, a challenging space. Along with the usual barriers that come with digital transformation, fintech teams must also navigate strict regulatory and privacy issues. In response, we’re seeing a surge of creative solutions, and today we’ll speak to project leaders behind a couple of those efforts.

First up is Michal Raczka, IT director at mBank in Warsaw, Poland. 

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STEVE HENDERSHOT

Let’s start with a look at the larger landscape of digital transformation within financial services. Obviously, this is a moment of major transition for everyone, whether you’re leading projects at a digital bank, as in your case, or at a legacy institution. What do you see driving this shift?

MICHAL RACZKA

I can mention several different factors, but the first and the most important is about customer needs and demographics. Clients simply want to do banking and financial operations online, and demographics are pushing us in that direction—the younger the people, the more digital natives. Customers want to do [their] banking anytime, anywhere. For example, in October alone, our clients looked into the system over 100 million times, and we have just over 3 million clients. The second is about operating costs. The number of transactions and operations is growing very, very fast, and it’s much cheaper now to handle them in automated, online processes.

STEVE HENDERSHOT

What aspects of digital banking feel like they’re fairly mature at this point, and which areas are still in need of some refinement?

MICHAL RACZKA

Daily transactions are very mature, fast and secure. This is not a problem. But from [the] customer point of view, the challenge and the next wave will be about the 100 percent digital and mobile mortgage process. Currently, due to demographics, the challenge is more about the customer readiness. When you make a really important decision in your life, customers want to meet a real person and go through the process with [a] real person. But younger people usually don’t have this barrier.

From [a] technological point of view, it’s about taking advantage of new possibilities. Just a few examples: artificial intelligence is the next wave—it’s the main technological trend, helping companies and our customers make better decisions thanks to AI capabilities. Cloud infrastructure—it’s all about managing spikes and, what is very important, to increase the speed of innovation.

STEVE HENDERSHOT

As you’re leading these projects, teams receive input from a lot of different stakeholders: executives, team members, regulators, customers. How do you balance all those inputs?

MICHAL RACZKA

We are striving for strategic alignment, value delivery and agility. And agility is the most important thing for us. This starts with the members of the board of directors down to the product feature team level. We have implemented quarterly business review to make sure what we do is communicated, relevant and engaged. We have quarterly cadence in order to keep the high agility. Above what I describe is only the technical part of the process, but the most important thing here is the structure of the product teams and how people are empowered to make decisions.

STEVE HENDERSHOT

It’s not just your IT teams delivering projects at mBank. You’re also bringing in team members from across the enterprise who are creating solutions using low-code platforms. How has that impacted your projects?

MICHAL RACZKA

Low-code platforms are related to lack of digital talent and tech talent. What we addressed with low-code platform [is that] we can employ and hire businesspeople. We have to design a top digital customer experience, and the market requires people with, I call it digital imagination, who understand trends. By [using] low-code platform, we decrease the technological challenges.

You don’t need to have to be a technological person. You need to delve deep into the problem that needs to be solved through projects. And for engineers, we say you need to have business acumen. And one plus one creates big value and great products, innovative products for our customers.

STEVE HENDERSHOT

As customer preferences evolve and new tech emerges, how do you see fintech projects changing?

MICHAL RACZKA

The future of banking and projects will look very different from today. Banks will become kind[s] of platforms with services for their customers. In other words, banks will become aggregators of financial and fintech services.

The three most important financial technologies will be machine learning, the Internet of Things and automation. And, just to give you [an] example, digital money—it’s going to have a huge impact in one way or another. And I’m not talking about cryptocurrencies here—which is totally another story—but about digital money that you can take into your digital wallet and physically store it in your own place.

When it comes to digital capacity, we will require a lot of attention to cyber risk and cybersecurity. Banks and financial services must pay attention to be—and to remain—a trusted partner for customers and businesses.

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STEVE HENDERSHOT

Like Michal said, digital money is gaining traction.

Take the Bahamas’ Sand Dollar. It isn’t cryptocurrency, it’s a central bank digital currency, or CBDC, an electronic currency that’s an extension of the country’s traditional currency. The Sand Dollar was the first such currency worldwide, trailblazing its way to number five on PMI’s 2021 Most Influential Projects.

Projectified^®’s Hannah Schmidt spoke with Kimwood Mott, a project manager at the Central Bank of the Bahamas in Nassau, who led the project to create and launch the Sand Dollar.

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HANNAH SCHMIDT

So Kimwood, tell me a little bit about Sand Dollar. Why did the Central Bank of the Bahamas launch the project, and what spurred the bank’s interest in a government-backed digital currency?

KIMWOOD MOTT

Thinking about the fact that the Bahamas is an archipelago, which means we are a cluster of islands spread across the ocean, and so it’s very difficult to move physical cash around. And also, we have a very concentrated population here in our capital, New Providence. But then when you look at our outer islands, you have very small settlements, and those small settlements aren’t very marketable for the larger commercial banks. Even with the paradigm shift of persons moving for reasons of employment or to seek some sort of financial independence, they would leave those smaller settlements to come here to the capital. And so, therefore, the client base for those commercial banks started to reduce drastically. And because of that, they also started to pull out of those brick-and-mortar commercial bank locations, and it left somewhat of a financial vacuum.

So having a digital currency, what we looked at was the fact that we needed some sort of solution for financial issues that were happening in especially those outer islands, even the inner-city communities, where individuals were either unbanked or under-banked.

HANNAH SCHMIDT

What were some of the challenges the team faced in creating and launching the Sand Dollar CBDC?

KIMWOOD MOTT

When we embarked on the project, we looked at what would be a nice pilot. We chose the Exuma Islands because Exuma was somewhat of a microcosm of the Bahamas in general. It had a centralized mainland with surrounding keys that sort of mimicked our capital and its surrounding islands. So, we tried to see how we can face and overcome the issues around geography. So that was one of the first elements and looking at how do you operate a digital currency that requires technology, communication, internet access, et cetera, over a large scale of land as well as sea. Luckily, we had a lot of infrastructure already in place.

Once we started to be impacted by COVID, we saw the issue came around the ability to move from island to island. Focusing on our smaller settlement and rural areas where we wanted to make that first impact—those persons who would benefit the most from the introduction of a digital currency—we were unable to move and stay on the ground and continue with the marketing efforts and the educational efforts to introduce persons to the CBDC. How do we overcome the introduction of a novel technology to individuals who already weren’t too tech savvy in the space of finance?

What we had to do was partner with the local Chamber of Commerce for those islands to find what we would consider CBDC champions and to have them be the voice on the ground, trying to find individuals who had influence over businesses and other financial concerns to try to help us to spur the actual adoption rate or to help with educational efforts.

HANNAH SCHMIDT

You also had to get intermediaries like payment service providers on board with the Sand Dollar. So, between local communities, financial institutions and these service providers, how did you build buy-in?

KIMWOOD MOTT

It came down to education. The buy-in was somewhat difficult at the very beginning because from the financial institution perspective, how does this impact my business model? How does this fit into my current pricing structure? And so, trying to get them to understand the benefits of not having to handle physical cash, even from a financial perspective, was greater than any loss that would have come from the shift in the way they operated.

When we start to look at some of the inner-city communities and the far-flung islands and settlements that were very cash intensive—and even when you start to understand the demographics around those populations would probably be a bit more of the elderly and those persons who won’t be as tech savvy—what we had to do is go on a massive education and promotional type of exercise to find those individuals in those communities who can actually speak to it. Try to get certain merchants to adopt and be somewhat of early adopters and get to show persons how easy and simplistic it was. And again, try to focus on those industries that were very cash intensive, where because individuals [who] were only operating in a cash environment lost a lot of sales.

HANNAH SCHMIDT

So, the Sand Dollar launched in 2020 with wider distribution this year. How has the project changed the financial services experience for customers?

KIMWOOD MOTT

So, what we’ve seen as more financial institutions start to offer the Sand Dollar, their client base is now being opened up not just to their persons who were onboarded by that financial institution, but now it opens up their ability to transact in a digital space with everybody that offers a digital wallet. So, the interoperability of the Sand Dollar has now created an environment where you no longer have to worry about whether or not this particular individual carries this particular type of digital token as long as they carry Sand Dollar.

We’ve been pushing for all the financial institutions, including the commercial banks that offer merchant services, to add Sand Dollar as one of the offerings of that merchant agreement. What it’s done—it’s sort of leveled the playing field. It’s reduced the cost of entry for smaller merchants and their ability to no longer require spending a lot of money on point-of-sale systems or some sort of high-end accounting software. Everything is now very simplistic. It can be done just using their mobile device. If they had a cellphone, that cellphone now became their point-of-sale system.

One of the added bonuses as well, before the end of this year—we’ve already rolled it out in beta, but we’ve linked the commercial bank accounts to the Sand Dollar wallet itself. So now the ease of topping up or transferring any funds within your Sand Dollar back to your commercial bank is seamless.

HANNAH SCHMIDT

Other countries are also looking to launch government-backed digital currencies. What are some major takeaways from your project that you think are important for other project leaders to consider?

KIMWOOD MOTT

I think one thing I would touch on is the why. When persons think about projects and they think about, “I have a dream or I have a vision, and I want to go out and I want to accomplish something,” it’s about, at the end of the day, did I just create something for the sake of creating it or is this going to have a true impact? Is this going to change lives? Is this going to make life better for many individuals?

When I hear a lot of countries talk about [how] they’re going to pursue a CBDC, if you notice, a lot of the smaller Caribbean countries or developing countries are further along in the development of a CBDC. It’s because of the why. When we look at some of the more advanced or developed nations, because of their infrastructure of e-commerce, electronic transactions, the history in that space is so great and the access to the average individual for electronic transactions is so easy that the need for a CBDC may not be as great or as attractive to those economies or those environments as they are for countries such as mine.

When we started the project and we reviewed the impact that it will have on the country, on the economy, on the individuals—especially those who are unbanked or under-banked—the benefits were so great we knew we had our why. We knew why we needed to do it. And of course, for those other countries that are also going that direction, they have their why’s as well.

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STEVE HENDERSHOT

Technology is remaking the entire global financial system, with project teams leading the way in reimagining how people buy, sell and save. But it’s still going to take some convincing to win over some of the more skeptical stakeholders. And project leaders already know the best way to make that happen: deliver something that meets actual customer needs. You can bank on that.

NARRATOR

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