FinTech - Tip of the iceberg
Are you waiting for the FinTech bubble to burst?
Do you think FinTech is a myth?
No my dear friend. The wait for you is going to be a long one, in case you keep mounting your expectations on baseless theories.
For all there is, financial technology or ‘FinTech’ is now even more pronounced than it was in the beginning of the year.
While working on my earlier post, "FinTech – Tech: The future of banking?" I was blown away by the astounding numbers that hinted towards huge attention to FinTech startups by the entrepreneurial and investor community alike.
FinTech has been catching the fancy of big and small investors alike such as Sequoia Capital, Andreessen Horowitz, Greylock Partners amongst others. Global investment in FinTech ventures tripled to $12.21 billion in 2014.
Accenture’s report 'The Future of FinTech and Banking' uses CB Insights data to highlight trends in global financial technology and the markets that are seeing the most growth.
There is heightened activity in the entrepreneurial community trying to launch convenient solutions to match the banking needs of the millennials.
As a CB Insights blogpost highlights, within the FinTech universe today, the smart money venture capitalists are investing in includes technologies ranging from peer-to-peer loan marketplaces to mobile payments to personal finance management to big data tools for capital markets and bitcoin.
While most of my dear colleagues from the industry are waiting for the FinTech phenomenon to die out, the entrepreneurial community backed by investors, capitalists and the govt are further strengthening their foothold in different parts of the world. The newest being Monetary Authority of Singapore’s commitment of pumping in $225m for FinTech growth in Singapore, the heightened activity of FinTech players in Ireland to the already established hubs of England, Australia, Asia and Africa.
An interesting article from The Economist highlights, “Why FinTech won't kill banks”.
What can banking and Financial Institutions (FIs) do to prepare for FinTechs?
Major banks like Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, DBS Bank, Santander, HSBC, UBS and Barclays’ have been some of the early banking institutions globally to recognize the emergence of FinTechs as potential threats.
They have been the first movers and turned their biggest threat into an opportunity by setting up their own venture capital funds to invest in the sector or made a move towards partnering/acquiring FinTechs to overcome the digital wave of transformation sweeping the global banking industry.
Changing customer behavior is forcing age old bankers out of their inertia and making them take note of the new financial technology companies springing up.
As Piyush Gupta, CEO of DBS Bank puts it, “It’s not all doom and gloom, and the shifting landscape presents opportunities for the nimble”.
Banking and FIs need to bring in a paradigm shift in their mindset. They not only need to update their core capabilities in alignment with the requirements and expectations of the millennials but also deal with a changing culture simultaneously.
As banks and FIs keep following the changing FinTech landscape before them, they need to understand the trends to stay ahead of and the companies they may want to watch from a competitive, acquisition or partnership perspective.
A recent development is further shaping fintech’s course - The Open University and Innovate Finance jointly launch world’s first FinTech 101 course. The online training course, FinTech 101: Understanding Financial Technologies, offers 50 hours of module-based learning and examines the origins of FinTech and its role in transforming the financial services landscape since the economic crash of 2008.
So my dear friends, this is just the beginning for FinTech. Watch out for Fintech 2.0 where banks and financial technology startups partner to revolutionize the banking industry.
Please do share your thoughts. I’d love to hear from you in the comments below.
PS: You will enjoy Santander InnoVentures, Oliver Wyman and Anthemis Group White paper on Fintech 2.0 Paper: rebooting financial services
Disclaimer: Views expressed here are personal and are not reflective of the organization the author works for.
Human Resources Manager
8yEarly adopters turn out to be winners against the inevitable
Result driven goal orientated leader looking out for life's next challenge or adventure.
8yYou can not think you will jump into the world of finance and disrupt as easily as other fields. Not going to happen get ready to be part of the industry controlled by titans. Your technology may be part of the future in this sector though in no way. Will these startups be allowed to change things and take over what has been established. There is no need for change in the least this is a excuse for startups to exist false innovation. New ideas try just establishing your companies going public and surviving. That is right without the rounds of collecting from investors these companies would be dead running. Most of the startups exploit people and communities adding no value to the people & communities that's money they so love. Exploiting aspects of business,worshiping the all mighty dollar, and disrupting companies. That provide and care for their people and communities is not innovation. Just a step back in the past that we worked hard to progress past welcome to the future.
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