Welcome back to episode 8 of the new series Under The Hood from 11:FS and Synapse. In this series, we’re diving deep to uncover the banking infrastructure that is disrupting traditional banking models and shaking up the system to improve the financial lives of customers around the world.

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This week we’re moving into the world of big banks and asking the question: Why can’t banks innovate? To expand on this topic the co-hosts, Simon Taylor, co-founder of 11:FS, and Sankaet Pathak, founder of Synapse are joined by guests Peter Hellwig, COO and founder at Atmos, and Andy Mielczarek, CEO of Chetwood Financial.

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The topic starts off with an overview of why innovation is difficult for big banks. They share their ideas about the impact of various limitations that the banks have, naming culture, talent, size, and structure as contributors. They also discuss the difficulty and expense of legacy platforms and a general lack of incentive to take big risks as further inhibitors.

“They shouldn’t start with today, they should start with tomorrow.”

- Andy Mielczarek

They continue talking about today’s technology stack vs legacy systems, highlighting the lower cost and enhanced control of modern modular systems. They go on to talk about fintechs being able to focus beyond the enabling layer so they can spotlight the value proposition for the customer. Today, fintechs can build what they need internally to respond to market opportunities quickly.

The host asks the group what these incumbent banks could do more of and the team answers with a variety of ideas including becoming purpose-driven, building super cost efficient products, getting to a place where doing good is profitable and pursuing greenfield initiatives. They finish with a discussion about how the big banks can leverage their core assets and distinguish themselves from the fast-moving fintechs over the next 5-10 years.