The quiet FinTech revolution: Insurance

To say there is “hype” around FinTech doesn’t do justice to the some of the rather breathless reports that have recently been appearing.

Some of this is a genuine feeling (bothin media and industry) that FinTech is where the internet was in the mid-90s, and no-one wants to miss that level of potential. Part of it, at least in my view, is that any story that fits the model of “plucky underdog takes on giant bank” is something the media knows will attract readers.  BitCoin startups add to that narrative a whiff of mystery (just who was the mysterious founder? What is this mysterious money?) and those ingrediants makes for a decent volume of press coverage.

The trouble is that while all the hype is around BitCoin, the future of payments and taking on the banks that may not be where some of the most exciting activity is taking place.

I’d been seeing small signs of this for a while. Ripple and Ethereum were being discussed by firms for whom banking ledgers were not core concerns. Law firms weren’t just discussing Smart Contracts; they were talking about the Blockchain in depth. When I was at the Barclays London Accelerator Demo Day last month, it really brought out to me how extensive the implications of the BlockChain could be.

On the day, I hugely liked the presentation from EverLedger, who are looking at BlockChain as a way of managing provenance for diamonds.  (You can see Leanne’s presentation (a brisk 7mins) on the day HERE on YouTube). It was one of those big ideas where you listened to what she was proposing, and like all really great idea thought “….this is so simple & so obvious”.  Crucially, aside from the brilliance of her ideas, it was notable that it was Aviva that was supporting her and it was the insurance industry that saw the opportunity here. For Barclays it's a great peice of development and investment

I also found it interesting that this was not the zero sum game that you sometimes hear from startups. The messaging around “disrupting payments” or “re-inventing banking” is often about the new player gaining market share by removing it from incumbents. This re-invention is a healthy and necessary part of business but it doesn’t necessarily increase benefits, or to use a sales cliché, “increase the size of the pie”. The attractive thing about solutions such as Everledger, is that the only losers (at least that I can see) are those who focus on stolen goods, blood diamonds or money laundering. By contrast, with this type of BlockChain innovation, the benefits are considerable for many sectors across the financial services industry.

In short, while all the hype may be on BitCoin and disruptive payments, the quiet revolution with BlockChain may take place less glamorously and sooner in some other areas.