The challenge of on-going innovation for FinTechs

A roundtable discussion between General Counsel from a range of fintech companies highlighted some common ground when it comes to the challenge of on-going innovation.

A virtual roundtable hosted by sector head for financial services at Shoosmiths, Stephen Dawson, and partner Luke Stubbs, in conjunction with The Lawyer, brought together a group of senior lawyers representing the fast growing fintech community. The topic of conversation centred on the need for continuous innovation: the pace of innovation and what is driving it, the impact of remote working, the importance of going back to your foundations and how legal teams ensure they are aware of new developments from the outset.

The pace of innovation and impact of remote working

One thing everyone agreed on, is that the pace of innovation has not been slowed by the pandemic. Product teams are still generating and progressing new ideas. What has changed is the means by which they turn ideas into reality. Remote working means teams have had to adapt and find new ways to maintain the pace of innovation. Whereas prior to the pandemic development teams worked closely together, there now tends to be a ‘division of tasks’ and a more siloed approach –perhaps inevitable with people being in different locations.

Many of the fintech organisations are having conversations with their staff to ascertain the appetite for agile working on a long-term basis.  There was a general feeling that, while some teams can work remotely quite easily, other teams (particularly those involved in the creative side of the business) are missing the opportunity for face-to-face collaboration.  It would appear that personal interaction plays a key part in innovation and in this respect, remote working could present a barrier, with one participant commenting “if we are going to stay remote, we will need to think about new ways of doing things”.

The prospect of people expressing a desire to work remotely presents a number of challenges for the business – if you don’t accommodate some form of agile working you risk losing and/or the inability to attract the best talent – but this has to be weighed against end productivity and business objectives.  The culture of the organisation is going to be key here and all of the roundtable participants anticipated the ‘new norm’ will involve a mix of office and remote working. Organisations will find the balance which works for them. People may not know as many colleagues over time, but those relationships they do have are increasingly close.

Avoiding innovation for the sake of innovation

An interesting conversation ensued about what is driving innovation and whether being labelled a ‘fintech’ brings a pressure to continually innovate and present new products or services to the market.

The need to “avoid innovation for the sake of innovation” was highlighted. While many fintechs are looking for continuous improvement, there has to be a reason for change. One participant referenced the ‘customer centric’ nature of their business and the importance of making everything as easy as possible for the end user.  If a new idea achieves this, you then need to consider whether it can be achieved by improving an existing product or if there is a need to “start afresh”.

There was general agreement on the importance of continually checking your foundations – the platforms and processes that are in place – to ensure they will support any growth trajectory.   A lot of work is going on with “re-platforming” even after only perhaps six years in some cases. Day to day development was described as essential, innovation is ongoing.

On-boarding the legal team

Dawson asked: “At what stage do the legal team get involved with tech developments?” An immediate response was “As early as possible”. All agreed it is important to position yourself as an early sounding board.

How is this achieved? One of the fintechs represented uses steering groups which always involve a legal representative and therefore makes the task easy. Another participant commented that she has found the product teams are actually happy to consult with the legal team from an early stage as, more often than not, the GC has worked in more than one fintech or FS-regulated business, and they value the experience the GC brings to the table.

If involvement is not forthcoming, a tip shared was to make sure you actively engage with the business and encourage your team to do the same. You need to actively position yourself to demonstrate your interest in the mechanics of the business and how everything works  - bringing the conversation full circle, it was noted that this is more difficult to do remotely as the opportunities for ‘water cooler conversations’ don’t arise.

To conclude on this point, as one participant commented, it is a matter of being “a friend to the process” and ultimately comes down to “the balance between being a trusted adviser and not being a blocker”.

A closing point….

With many fintechs now established and capturing an increasing share of the financial services market, Dawson tested the water to see if anyone would object to fintechs being referred to as ‘mainstream’. “That would be so flattering” came one response. The fact that online banking and remote accessibility to financial products is where it is today, and presents real competition to traditional banking compared to the position a few years ago, shows the strength of the sector and its appeal to the consumer. With innovation continuing apace, it’s a success story that looks set to continue.