Hypothetically speaking, it is early on a Monday morning, and a banker in Thailand just woke up with another headache. It was like having had his worst nightmare—but for real! The fintech digerati had gone from nibbling at his assets to eating them up in great bytes!
What is Fintech?
The term, fintech, a contraction for financial technology, has been on the minds of bankers all around the planet for a while now. Social Science Research Network looks at fintech as an evolutionary term arising out of the ashes of the immediate past crisis (2008).
Truly, as technology has enabled unique, financial solutions to meet the monstrous, consumer demand for mobile payment convenience--in both developed and developing countries--fintech is causing headaches for banks, not directly due to fintech products and services, but rather due to who is disrupting the status quo by delivering them and to whom they are being delivered.
To Regulate or Not to Regulate
We have begun a new age of financial globalization solutions, albeit financial services have been a digital industry since 1998--but not without regulation. So far the regulatory reaction to the dramatic changes being ushered in by fintech companies and their new applications has been slow, giving these disrupters much-needed time to spawn.
Cause and Effect
“Banks have spent years building upon their core, which they control and trust because they built it,” wrote Chris Skinner last week in a BANKNXT article titled, Fintech 1, 2 and 3.0 … There’s an elephant in the room and it’s under attack.
The article went on to point out that “as we entered the second decade of the 21st century, more and more technologies were attacking this core, proprietary structure.
“It is the open sourcing of that structure that has become the transitional new world, and, by its nature, is creating the major weakness in the old structure. Apps, APIs, analytics, AI, machine learning, cloud, mobile, blockchain, and more are all driving financial services to be plug-and-play as-a-service.”
Banks Get On-Board
The aforementioned banker’s headache is being treated with a paradigm shift!
Instead of trying to compete, regulate, or out-maneuver these fledgling, global fintech companies who are disrupting consumer behavior and the way the planet does business, the big news is that the establishment is beginning to embrace them—right down to their odd-socks and blue jeans!
Furthermore, traditional finance players are willing to sacrifice more than just the way they dress and set the global pace… they are innovating ways to espouse open-sourcing of financial frameworks.
This week, “J.P. Morgan’s Corporate & Investment Bank announced the launch of In-Residence, a program for startup financial technology companies to conquer some of the industry’s most pressing challenges. J.P. Morgan is inviting startups to sit ‘side by side’ with its businesses in order to develop innovations that could revolutionize the sector, enabling banks to operate faster, safer and at a lower cost.”
Additionally, in the past month, “Bank of England launched FinTech Accelerator to work in partnership with fintech firms on the unique challenges that they face as a central bank.
In the same fashion, “the Bank of Nova Scotia, Canada’s third-largest lender by assets, is collaborating with the financial technology firm, Kabbage Inc., to offer loans online to small businesses. Kabbage Inc. is among startups encroaching into financial services and attracting attention from large banks. The BOE program will be available in Canada starting this month (July 2016) and in Mexico later this year.
And “Scotiabank, with operations in more than 55 countries, joins Spain’s Banco Santander SA and Holland’s ING Groep NV in adopting Kabbage’s platform for some customers.
Fintech Inspires Joint Ventures
One of the more outstanding examples of joint venturing is the way in which H2Ventures and KPMG have collaborated to produce the 2015 Fintech 100 Report highlighting the leading global fintech innovators.
H2Ventures, an Australian fintech accelerator has turned financial services for the retail consumer into a major success for passionate entrepreneurs.
KPMG is a global network of professional firms providing audit, tax, and advisory services across a wide range of industries, government and not for profit sectors.
The top ten companies highlighted in the FinTech 100 Report are as follows:
- ZhongAn (China): an innovative online property insurance company, utilizing big data technology to assist with product design, automatic underwriting, auto claims, precision marketing and risk management.
- Oscar (USA): The Oscar team is focused on utilizing technology to simplify the entire healthcare experience.
- Wealthfront (USA): an automated investment service which combines world-class financial expertise and leading edge technology to provide sophisticated investment management.
- Qufenqi (China): an electronics retailer that offers monthly installment payment solutions to the students and professionals in China.
- Funding Circle (UK): created with one big idea; to revolutionize the outdated banking system and secure a better deal for everyone with offices in the UK, US, Germany, Spain, and the Netherlands.
- Kreditech (Germany): a technology company that delivers a range of custom-tailored financial services with a focus on under-banked consumers across the globe.
- Avant (USA): a fast-growing marketplace lending platform that is lowering the costs and barriers of borrowing for consumers.
- Atom Bank (UK): a new digital banking system, offering an app-based experience, using leading technology.
- Klarna (Sweden): one of Europe’s leading providers of payment solutions for e-commerce.
- OurCrowd (Israel): the world’s leading equity crowdfunding platform for accredited investors to invest in Israeli and global companies.
As we service our clients in the payments industry, IRIS CRM is focused on fintech players and the potential of financial technology to transform the ways in which global payments are made, how payments are made, and where they are made—along with who expedites them. Contact us to learn more about this exciting new global safari.
