This weekend marked the 10th South by Southwest Conference and Festival (SXSW). I’ve played various roles over the years: attendee, speaker, advisory board member, press corp, and party host.
There were few financial institutions in attendance when my relationship with SXSW began. Silicon Valley Bank was there early and in force because so many of their clients were there but you’d only find a smattering of brand or digital folks from other FIs. Then FinTech became a hot thing and the scene exploded. Banks and traditional financial institutions are still severely underrepresented as they send their corporate venture or innovation teams as delegates.
I believe every bank should send a rotating cast every year from their senior leadership team, beginning with the CEO, with the task of reporting back what they’ve learned. As an advisory board member, I’m under no obligation to pump attendance (but I’d love if they gave me a referral code), but there is a reason I am willing to invest my time in SXSW. Because of what we do at FinTech Forge, in our speaking engagements, and in our role as press for Breaking Banks, I attend A LOT of conference. I’m not arguing you shouldn’t attend events like Money2020, Finovate, The Financial Brand, LendIt, Digital Banking, Conference for Community Bankers, FiFinTech… the list goes on. There are good reasons to attend these events which is why I go, even when I’m not on stage. These events allow you to hear and interact with others in our industry about the challenges and opportunities we face. You can meet with fintechs looking to help you digitally transform your business, or with the fin-surgents (credit to Matt Harris for the term), looking to disrupt you.
Why SXSW Is Different
SXSW is different and here’s why it is important.
On the surface, SXSW can seem like a boondoggle to hear from past presidents and tech prescients, attend high end parties hosted by the likes of Twitter, Facebook and Google, and get swept up in the latest brand experiences. Yes those things happen. Here’s what else you need to know.
Innovation is hard. Industry transformation is even harder. One of the biggest challenges is breaking from what we already know and have experienced. Henry Ford is famously misattributed with saying “if I asked people what they wanted, they would have said faster horses.” While Ford didn’t say that, we see the analog play out when we ask customers what they want from the branch or their checking account. Lower fees. Shorter hold times. More technology and less glass. Modern design and more personable staff. These are all improvements based on what we know.
Even the so called fin-surgents that are going to disrupt banking are often putting digital lipstick on what we already know. Don’t get me wrong; some of these challenger banks and the digital banks being created by incumbents are doing interesting things but they’re only extending what we know.
The Ends are Moving Much Faster than the Means
If you want to understand where banking is going you need to look outside of banking. The services financial institutions provide are means to other ends: conducting commerce, financing purchases, accruing wealth, and managing risk. The ends are moving much faster than the means we as incumbents are providing; in order to not be slowed down, many of the providers of the ends are reinventing the services their customers need to accelerate adoption of their own products.
SXSW is the window incumbents need to where the world is going, what is emerging, and most importantly how it is merging. SXSW is where you can see how AI and drones are being put into potential practical use. You can see how the trend of offline activities being taken online is reversing as more digital is brought onto terra firma through AR, VR, and augmentation. Of the 86 applications I reviewed for the SXSW accelerator this year there were still plenty that either weren’t interesting because they didn’t go far enough or were so far fetched they were most likely to appear in a SciFi movie. Even understanding these boundary conditions is useful, and there were still plenty of companies in the middle.
SXSW is showing the user experience of the future. Customers don’t want your digital bank. Don’t stop building it but don’t expect it to solve your challenges. Customers want your bank-- well the means you enable as bank, as part of the other experience. Customer expectations aren’t being set by incremental improvements. Expectations are being set by those transforming their experiences. Banks that want to thrive in the coming age need to think outside of the banking box and that means drinking from the fire house of SXSW.