Reading the FCA’s Project Innovate feedback statement over a cup of tea this morning triggered some lively debate at lang cat port authority about life, the universe and how financial services has changed (or not, depending on your point of view) in the past couple of decades.
We were quite excited to see Amazon, along with several venture capital and crowdfunding types in the list of non-confidential responders to the FCA. And – trade associations to one side – a bit depressed by the relative lack of representation from the ‘traditional’ life and pensions sector. Don’t the established players care about innovation anymore? Are they capable of it?
Existential angst hung in the air …
Two memories from my early career sprang to mind. One, of a respected lifeco senior manager saying he didn’t think open architecture investment products/platforms could ever catch on (ha ha). The other, the story of how a well-known airline had to outsource creating a seat that could convert to a proper, flat bed to a luxury yacht manufacturer. Because the airline engineers where too flummoxed by technicalities and established development processes to do it themselves.
Paralysis by analysis is a pretty easy trap to fall into.
In our industry, whether you’ll receive a kicking from the regulator for daring to be different gives an added frisson of danger when it comes to stepping into the unknown. So we’re all for Project Innovate if it gives people the confidence to push the boundaries more.
The Innovate feedback statement reflected the usual tension between people wanting the FCA to tell them what to do and hold their hand (Daddy FCA, please make this world safe for us) and people wanting the FCA to back off, stop wasting levy payers money and just let them get on with it (Do you think we’re stupid? We know what we’re doing. Treat us like adults, please.)
But in reality the FCA can only ever do so much. To some extent they will always be running to catch up: group personal pensions, Alternative Trading Systems in the wholesale market, platform service providers – all things that emerged as square pegs to the regulatory round hole until policy makers caught up. For my money, industry indecision – risk, risk, rabbits, headlights – is the real enemy here.
How prepared are we to commit to change – to blow the whistle and go over the top in the name of properly ‘out there’ ideas? Or are we still too worried about the potential consequences? Are we still prone to take refuge in endless information gathering and finger pointing at the regulator?
The presence of a giant internet business like Amazon on an FCA Project Innovate list should be a wake-up call. Better make up our minds and innovate if we’re going to embrace the changing face of financial services and live to fight another day. Or stand by and suffer death by wilful indecision.
Only we can decide.