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13 december 2017

“Innovating in finance innovation: banks double up on the digital revolution”

Marie-Anne Barbat-Layani signs a tribune in the latest white paper of the Pôle Finance Innovation : "Fonction Finance : 140 innovations au service de la croissance".


The CEO reminds that no business sector is unaffected by the digital shake-up, no company, large or small, and no market. " The banking sector is special, due to the very nature of its business. Banks face a double challenge. They are digital players themselves and must also finance the digitisation of their customers. Not only must they rethink their own models - like other companies wrestling with technological revolution and an influx of new competition to already hyper-competitive globalised markets - but they must also find the right technical solutions for the new financing needs of other players in the market, their customers."

However, she points out a difficulty : "The question of financing innovation comes down to the financiers' evaluation of risk. Innovation is often accounted for as a cost (salaries, research studies, marketing expenses, etc.) in which it is hard to see the return on investment. What is more, by their very nature the things being financed cannot be posted as collateral. There are a number of technical solutions, but nothing can replace knowing your customer and understanding their projects. Innovation finance is often tailor-made."

So banks are mobilizing by implementing networks and specialist divisions to promote relations with SMEs, mid-sized firms and start-ups. They have invested massively in incubators, where start-ups can find support and pool experience.

And she insists finally : " However, the current effort by banks, held back as they are by the treatment of investment in intangible innovation and constrained in their lending by prudential requirements, will not be enough. The upcoming generation of entrepreneurs needs a new generation of investors, outside the interventions of banks and public assistance. The government must find a way to persuade French people to invest their savings in innovative companies. This will require education and some strong and stable tax incentives."

Fore more information: Pôle Finance Innovation

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