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Episode 5: Markus Lampinen - GLOBE Series

2Degrees

"Time frame is incredibly important...getting to market quick enough is a big challenge. It's not about doing pilots, or having great technology; it's about the scale and deployment."

Episode 5: Markus Lampinen

INTERVIEW HIGHLIGHTS

  • Finance as a whole is undergoing a paradigm shift, transforming to greater efficiency, transparency and accountability.
  • There was a clear vacuum where new types of financing models – crowdfunding, peer to peer lending, online syndicate marketplaces, real estate financing, wealth management – started popping up; but, because these hadn’t been done before they didn’t really have the right infrastructure and support to roll them out with the best practices.
  • The cloud back office is an efficient way for finance companies and finance professionals to roll out technology solutions for bank-level secure finance applications.
  • A huge shift in recent finance-based technology is the moving out of the R&D stage and into the acceptance stage. It’s an acceptance that technology is becoming more and more important, that automation and machine learning and artificial intelligence are a part of or will be a part of our everyday. The discussion now needs to be about what do we do about it and what does it mean in practice?
  • Finance organizations need to be competitive five years from now, 10 years from now. Millennials are growing up and they will have more money to spend. There is still a bit of a generation gap in this industry. What will that mean for a bank with millions of clients? Where are they going to see their biggest growth? The discussion centers around ‘do we let the market cannibalize our business or do we cannibalize our business ourselves’?
  • The toughest part is, when? Too early and you risk alienating the existing clientele; too late and you’re not going to be relevant. The fintech industry needs to be super pragmatic in how we help these organizations reinvent themselves and modernize. We need to help them understand what fintech can mean in practice and what it can actually do for their top and bottom lines.
  • I think that’s the most exciting part: That a ton of brilliant people are thinking about how we shape our services in a way that the bank asset manager, investment banker, and lender, for example, become a more inclusive and transparent part of the end user’s life.
  • This disruption in finance is hopefully bringing these organizations closer to the client; historically, a lot of financial processes have been non-inclusive. What if, for example, a person can process a mortgage application using an online chat-bot dialogue over the course of just a few minutes?
  • Stakeholder groups, such as cleantech, are bringing the discussion to the table asking ‘what are the barriers…what are the blockers?’ My takeaways are that there are a lot of structural inefficiencies in the market. There are three things, really: structural inefficiencies, timing, pace of adoption.
  • Cleantech investments are great. They can essentially be deployed around the world quite cost efficiently. They typically require less than 50 million dollars in financing, which are fairly small projects when you consider that investors are used to writing checks to the tune of half a billion dollars. But are they investing in these projects? We have to address the structural inefficiencies that are barriers to investment. Technology has a part to play in that and can help with valuation, onboarding, and standardization.
  • Timeframe is incredibly important because getting these things to market quick enough is a big challenge. It’s not about doing pilots or having great technology; it’s about the scale and the scale of deploying that technology around the world. That’s where we need to address the structural inefficiencies because those are the ones have the potential create a cascading waterfall effect.
  • We see the rise of Asia as a fourth industrial revolution; technology is developing at breakneck speed which will change the nature of many job categories forever. Fintech is growing exponentially and it’s forecast it to flip traditional banking on its head. And we can’t forget climate change as an overarching and existential threat to humanity as a whole.
  • Everybody is familiar with Tesla’s self-driving car, or their auto pilot driver-assisted tools, and how much of a transformative effect such can have. Think about it: There are millions of truck and car drivers in the U.S., and there are millions more who work in auto repair and maintenance. Tesla has only 20 car parts compared to about a 300 in a traditional car. So, it’s not just about self-driving cars threatening the driving jobs but they are actually threatening the entire ecosystem. But at the same time, as someone at the Asian financial forum said, in China there is such a huge demand for English teachers that you could employ all of those types of Western jobs that might lose out due to automation. Apparently, the demand in the Chinese market for English teachers is larger than the working population of the United States! That’s staggering.
  • When I look at the rise in Asia of automation, I’m left with the thought that it’s just going to accelerate. I think we need to embrace technology in a very lucid and open way – not be naive and not without realizing the consequences. Looking at industries in the past, they all have gravitated toward greater efficiency. So, too, in the finance community we need to have an appreciation and adoption of technology.
  • By embracing technology we should be able to generate a ton more data around how we finance low-carbon or zero-carbon innovation. We need to get better at understanding the entire value chain.
  • At this point, a lot of the data is still very proprietary. It’s very siloed, very domiciled and hidden away. But collaboration is key. Shouldn’t all this data be accessible in a way that we could all benefit from it?
  • There needs to be a marriage between what technology can enable and what finance competence and the brilliant minds at a lot of these organizations can accomplish together. Because there’s somewhat of a mismatch right now in terms of them not knowing what technology is available to them and how it can help them. We need to start talking about technology on a more practical, pragmatic level and show them what it can actually do in the finance world.
  • We’re very excited about what we call ‘distributed finance’, meaning that in the future, finance is going to come from all avenues in the market not just from the big banks or the investment banks. It will also come from individual developers and from other countries in the world that lack the financial architecture that is available in the western world.
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