The 15th September marked a decade since Lehman Brothers filed for bankruptcy, becoming the straw that broke the global financial system’s back. As the anniversary has drawn closer, I’ve been reflecting on my brief time there as a junior employee and the seismic changes that were catalysed by the bank’s collapse. In the wake of this disaster, regulatory and technological changes gave rise to a thriving ecosystem of Fintechs that brought alternative finance into the mainstream.
The rise of Fintech
New laws designed to rebuild confidence after the Global Financial Crisis made it very difficult for consumers and businesses alike to get finance. At the same time, technology was changing and people were starting to leverage data in new and innovative ways. It was in this environment that Fintechs flourished; challenging the fundamentals of a highly regulated financial system to create greater financial inclusion around the world.
Not only were Fintechs building something from the ground up, but they were also operating outside of these stringent regulations. This gave us the freedom to write a new future for finance unbound by legacy or precedence. Where traditional finance at the time had lost touch with their customers, Fintechs built successful businesses around understanding their customers’ specific needs, developing revolutionary solutions and prioritising user experience. Technology allowed us to be flexible, to automate admin-heavy processes and make the customer journey quicker and easier than ever before.
A cultural shift
This customer-centric approach, along with transparency, have been the biggest cultural differences I’ve seen in financial services today compared to that of a big investment bank 10 years ago. When I started my career, there was a complete disconnect between the bank and its customers. Internally, information didn’t even flow between senior management and junior staff. Decisions were made a world away from ours and we were discouraged from asking questions of the highest level. This is why the majority of Lehman Brothers staff were just as surprised as its customers when the bank came crashing down. They simply had no idea what was going on behind closed doors, and how bad things had become.
Many of the entrepreneurs that went on to found Fintechs started their careers in traditional finance just as I did. Our experiences there and the lessons we learned have shaped a global Fintech culture, breeding open-door policies and a focus on collaboration rather than hierarchy. The last 10 years have gone a long way to revolutionise finance and as we look ahead to the next 10, I believe that we’ll continue to see a fundamental change in the way that financial history and Fintech future intersect.
Anil Stocker, CEO & Co-founder, MarketInvoice