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  • @fintechna 3:35 pm on January 9, 2018 Permalink | Reply
    Tags: , , , , , , Model, ,   

    Free core banking from the ASP model to be future ready 

    Legendary magician Harry Houdini used to perform spectacular escapes handcuffs, straitjackets, ropes and chains, and often combinations of them. One of his most famous and difficult escapes was the 1904 London Daily Mirror Handcuff Challenge, where Houdini managed to escape from a pair of handcuffs that had taken a Birmingham blacksmith five years to perfect.

    Free core banking from the ASP model to be future ready fintech
    Read the report

    Many bankers see the traditional application service provider (ASP) for managing their systems—renting the use of core software centrally hosted and managed by a single vendor—as a set of handcuffs they cannot pick. The ASP model proved useful in the early 2000s in helping lower costs. Yet over the years, the constant adding on of various components (think digital user interfaces or new payment types) atop 30-year-old has created an increasingly complex maze of systems that is now hard to maintain, difficult to integrate, designed for “vanilla” service, slow to change and costly to service. Add to that the frustration of vendor-controlled product releases that can take the of banks’ IT innovation out of a CIO’s hands.

    If banks are to have a chance of competing for customers’ attention and business against the likes of Amazon, Google, Alibaba, fintechs and others, they must devise a clever escape from the constraints of the ASP model. Digital rivals are built bottom up on IT systems that are open, scalable and flexible, enabling innovative services, high-speed responses and efficient operations. Banks need the same traits to be future —to connect with broader digital ecosystems and deliver hyper-relevant services (financial and non-financial, human- and automation-supported) through multiple and rich channels in real time. Those banks unable to rise to the occasion risk becoming digitally irrelevant and targets for acquisition.

    Luckily, the typical ASP model is not escape-proof. While Houdini was an illusionist who used tricks to perform his death-defying feats, banks can take a few well-staged steps to truly their core banking systems and become future ready.

    It begins with designing the bank’s future-state IT architecture. For the future-ready bank, we envision the ASP model evolving to serve as the engine for Systems of Record, Messaging and Services activity. It will be open, modern, secure and agile enough to allow for seamless integration of applications, API management, Cloud hosting, and plug-and-play of best-of-breed technology. Rather than having the lion’s share of its IT served by a single ASP provider, the bank provider pool becomes more diverse, fluid and adaptable. Then, banks will need to rewire their IT delivery organisation to adopt a multi-speed approach, operating and simultaneously supporting multiple business objectives. They will also need to “hollow out the core” and diversify the providers of IT technology for greater flexibility and innovation. Houdini used keys and cutlery; banks can use processes and technology to free themselves from the handcuffs of the ASP model.

    Free core banking from the ASP model to be future ready fintechRead our recent report, Breaking Free of the ASP Model, for a closer look at how banks can break free of their ASP model—and how a few banks are already doing it.

    The post Free core banking from the ASP model to be future ready appeared first on Accenture Banking Blog.

    Accenture Banking Blog

  • @fintechna 12:18 pm on November 9, 2017 Permalink | Reply
    Tags: , AIDriven, , , , Model, Spooks   

    New AI-Driven Credit Model for LendingClub Spooks Investors 

    EXCLUSIVE— Online lender  Corp. reported revenue at an all-time high, growth in loan originations, and declining losses during its third quarter earnings yesterday, but its guidance for the fourth quarter has sent its stock plummeting. LendingClub stock fell 22% in the hours after the company’s earnings call. The decline comes after the company’s CFO, Thomas [&;]
    Bank Innovation

  • @fintechna 7:17 am on May 18, 2017 Permalink | Reply
    Tags: , , , , Model,   

    SoFi Is Building the ‘Banking Model’ of the Future 

    Relationship- is top-of-mind for financial institutions, but in many cases, that does not translate into real actions. That’s according to Mike Cagney, CEO of . “We don’t think of ourselves as a finance company, we are a relationship company,” Cagney said during TechCrunch Disrupt yesterday. “[Traditional] FIs have been resistant to this , but in [&;]
    Bank Innovation

  • @fintechna 12:18 pm on March 16, 2017 Permalink | Reply
    Tags: , , , , Model, , , Uncluttering, ,   

    Uncluttering the Robo Space: What’s the Winning Model for Automated Advisors? 

    We are only about three months into the year, but robos have already made waves in the wealth management , and the ongoing debate of human vs vs hybrid models continues. If you haven’t been following: Yesterday, Charles Schwab &; one of the more “traditional” players in the wealth management space &8212; launched its [&;]
    Bank Innovation

  • @fintechna 3:35 am on November 13, 2016 Permalink | Reply
    Tags: , , , Model, , , , ,   

    New Report: Robo-Advisory Model At a Tipping Point 

    The -advisory is at a with all current players needing further development if the robo concept is to prove long-lasting.

    Without further refinement on the part of the individual robo-advisors themselves, a substantial portion of current providers will have difficulties succeeding in the long-term. This is one of the main findings of the Leading Robo-Advisors 2016 &8211; Benchmarking the current automated investment landscape and mapping the road ahead&; for which the Swiss research company MyPrivateBanking Research analyzed and ranked 30 leading robo-advisors worldwide.

    In their global benchmarking of robo-advisor platforms, the MyPrivateBanking report identifies plenty of examples of good practice at the level of individual functions. However, in the researchers’ view, no providers are yet coming close to offering an end-to-end consistent level of excellence. “We see that most robo-advisors are good at some features, but at the same time missing out completely on other important ones”, say Francis Groves, senior analyst of MyPrivateBanking Research.

    “While this was tolerated by clients at the start of the robo-advisor breakthrough, they now demand a top-performance throughout the full process, from comprehensively explaining the services to superior portfolio reporting.”

    Schwab intelligent Portfolios, Indexa Capital and Nutmeg top ranked robo-advisors

    MyPrivateBanking’s ranking of 30 robo-advisors from 15 countries awarded the highest scores to the these three platforms:

    &; Schwab Intelligent Portfolios (USA) – exhibiting great strengths in the key areas of product and process information and client assessment plus user experience (43 points out of 60).

    &8211; Indexa Capital (Spain) – a good ‘all-rounder’ with a solid performance in all areas (42 points).

    &8211; Nutmeg (UK) – Another example of excellent product and process information coupled with being one of the top three providers of investment knowledge and education (42 points).


    New Report: Robo-Advisory Model At a Tipping Point fintech


    Most robo-advisors fail to offer a user friendly performance across the full process and all channels

    However, with more than a third of the evaluated firms achieving less than half of the possible points, and the highest scoring robo-advisor scoring slightly less than 75% of the maximum available points, MyPrivateBanking sees considerable room for improvement. In particular the survey identified that there are too many gaps in most robo-advisors’ onboarding processes to guarantee a steady stream of new clients.


    New Report: Robo-Advisory Model At a Tipping Point fintech


    MyPrivateBanking’s evaluation covered 43 different criteria and assessed the performance overall including for the robo-advisors’ websites, mobile apps and social media channels. Some of the more troubling key research findings are:

    (1) None of the platforms evaluated have yet developed the robo-advisory model of client recruitment to its full potential, with even the best current players leaving out at least one essential component. For example, analysts found that advisors provided either good information about the product and process OR good knowledge content but rarely both.

    (2) Client assessment, the highest profile component of robo-advisor onboarding, is generally falling well below a sufficiently rigorous standard. Less than 50% of the evaluated advisors failed to explain the purpose of their questions and only 53% included a comprehensive check on a prospective investor’s attitude toward risk.

    (3) A high proportion of the robo-advisors, 23%, are abdicating from the any responsibility for sustaining their own clients’ ongoing investing ‘career’ by the provision of relevant, easily digestible education and knowledge or even, in some cases, providing dedicated social media.


    In respect to robo-advisors offered by well-established institutions the MyPrivateBanking analysts identified a tendency of such actors to enter the robo-advisor space for the first time by creating robo mini-sites. These are characterized as one or two page websites, which may or may not be embedded in the institution’s overall web presence, that are clearly not designed to be revisited by signed-up clients.

    In MyPrivateBanking ‘s view this is a kind of robo-advisory sub-species that may assist with rapid client onboarding but which does not, on its own, do a lot to foster enduring client-advisor relationships. “We foresee the need for leading institutions to be more radical and wholehearted in their automated investment initiatives in the next few years, even if this means starting over again with a second robo-advisor to replace their first.”

    Only robo-advisors constantly pushing ahead for superior client experience will survive

    “The pioneer years of robo-advisors have come to the end and the market will separate the wheat from the chaff“, stresses Francis Groves. „Too many automated investment services target the same, growing &8211; but still not sufficient &8211; client segment to nurture all or most of them. Too few of the automated investment services see their platform through the eyes of a first time user, while many are losing sight of the need for sustaining a customer experience that will – ideally – last for years.”

    New Report: Robo-Advisory Model At a Tipping Point fintech

    In this report, MyPrivateBanking makes a series of recommendations on the basis of our benchmarking evaluation, among them:

    (1) Aiming for transparency is the best policy, especially when presenting the robo-advisor’s pricing and product and process information.

    (2) Automated investment platforms need to be subjected to rigorous user experience testing. Looking good is not enough – equally, content must be in-depth.

    (3) Robo-advisors risk side-lining themselves if they don’t recognize that clients need financial plans as well as investment portfolios. At least a basic financial planning offer should be considered for inclusion as part of the robo value proposition.

    The post New Report: Robo-Advisory Model At a Tipping Point appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

  • @fintechna 10:56 am on May 9, 2016 Permalink | Reply
    Tags: , , , , , Model, ,   

    Exploring Banking as a Platform (BaaP) Model 

    Exploring Banking as a Platform (BaaP) Model fintech

    I co-authored this post (and its sequel which will be published shortly) with David Brear, Chief Thinker at Think Different Group

    The integration and delivery of financial services is changing as new channels, products and partnerships are being explored. as a () is one of the alternatives. Platform strategies require a radically different approach to how a business is architected. Owning an entire business stack may not be feasible nor desirable anymore.

    In 2015, it became almost the expected cliché slide at any self respecting financial  conference that someone would stand up and reference the interesting infographic highlighting the success of new ‘sharing economy’ players. The references, first discussed by Tom Goodwin on TechCrunch, illustrates how the middle men get cut out and how companies that take over the customer interface are the ones to gain.

    Exploring Banking as a Platform (BaaP) Model fintech

    If the presenter had an updated slide, they may have referenced Deliveroo, the biggest restaurant delivery service that makes no food.

    These companies have grown exponentially in both popularity and success in the last 4 years. They have scaled their business models and platforms to cover more geographies and locations than even the largest global . But while platform strategies have taken the world by storm in many other industries, platform strategies haven’t worked out in banking or insurance.

    By platform strategy, we mean those that IBMCiscoIntelMicrosoft developed in the 80s and 90s. Equally, AmazonGoogleApple and the firms previously mentioned have also employed more recently.

    The only exceptions in the banking sector may be found with Visa and MasterCard who, as networks, had to develop a platform strategy where issuers, acquirers, startups, various payments service providers and merchants are symbiotically linked. In that sense, most banks are part of Visa or MasterCard’s platform strategy, but do not have a platform strategy of their own. In insurance, developing a network of agents, brokers and master general agents does not really qualify as a platform as it is limited to a distribution channel.

    Why Didn’t Financial Services Organize As Platforms?

    There are three main reasons why financial services industry incumbent did not organize as platforms:

    1. Current Business Models – Banking and insurance company business models do not currently lend themselves to network effects. They do benefit from economies of scale – although this may be hotly debated – but not network effects. Without the benefit of network effects, it makes more sense to own one’s stack entirely and not share it. Why create a platform with partners when the benefits will be linear at best?

    2. We’re Number One, So Why Change? – Up until recently, banks and insurers were the perfect intermediaries. They were the best positioned to make credit or underwriting decisions. Why create a platform with partners when no one else knows how to lend or insure better than the current players?

    3. We ‘own’ the customer – Up until now, how individuals or corporations interacted with one another and between themselves lent itself to a top down organization for the selling of financial services. If the industry owns the narrative of how a financial product gets pushed to an end user, why create a platform with partners?

    These conditions have been unique and protected the financial services industry incumbent players from the reality faced into by many other industries and individual organizations. Today, though, we live in a world where computers and algorithms are proving to be very adept at pricing credit and underwriting risk. And where in the past data that was not readily available, it is very abundant and available in real-time today.

    Technological innovations, coupled with significant regulation changes, have lowered the barriers of entry into these markets to a staggeringly low level. Completely new organizations like Mondo Bank in the UK, Simple and Moven in the US, and some of the largest technology firms, like Apple and Google, now move freely into these markets at will.

    As this occurs, banks and insurers run the risk of losing their dominant position as primary intermediaries for customer interaction and engagement.

    Network Effects Have Changed The World

    Network effects impact us all on a daily basis, via social networks and other marketplaces. These same social networks and marketplaces, after having gotten us used to interacting with one another in a different way, are now encroaching on financial services, with payments and lending initially being their target.

    Smartphones, broadband internet, the 24/7 availability of commerce and data, and social networks have made us organize ourselves very differently than in the past. The Millennial generation, weaned on this new paradigm, now have completely different expectations than their parents or grand parents of communication and commerce.

    Exploring Banking as a Platform (BaaP) Model fintech

    There are other reasons why financial services industry incumbents need to shift to a platform strategy. For example, financial services startups, competing against these incumbents, is one narrative brandied about. Frankly, the startup competition is a by-product of the root causes rather than a driver.

    Without  competition, financial services industry incumbents would still need to think about platform strategies, as the root causes are much more fundamental than that. Financial services industry incumbents need to transform into “fintech incumbents,” with a complementary platform business to better compete.

    We recommend the book Platform Leadership by Annabelle Gawer and Michael A. Cusumanoto to those who want to explore further what platform strategies are. In the book, the authors’ outline four sets of strategic choices that are part of platform leadership:

    1. Determine the scope of the firm: Is it better to create product complements internally or let someone else do it? How far into the technology value chain should a firm extend?
    2. Design the product with strategic intent: What degree of modularity is appropriate? Should product interfaces be open or closed? What information should be disclosed to other companies?
    3. Shape relationships with external complementors: How can the company balance competition and collaboration with outside players? What’s the best way to create and sustain relationships with complementary product providers?
    4. Optimize internal organizational structures: What processes and systems will allow the company to manage internal and external conflicts of interest most effectively? What’s the right way to resolve the tensions between industry players?

    7 Levels of FinTech Platforms

    For a bank or an insurance company to become a platform for financial services, profound transformations need to happen. Becoming a “digital bank”, if taken in the strictest sense of the term (i.e. bringing distribution channels to the digital realm) is not enough.

    A platform architecture implies transformational changes across the business/technology stack as well as fundamental choices that dictate how product, service, technology and HR resources are articulated between, 1) What is delivered internally by the core; and 2) What is delivered externally by partners active on the platform.

    The distinction is important as it defines the company and the core differentiator in the market. What do we have to be awesome at? What can we let other people do? How do we exceed consumer expectations?

    Below is a potential view of a financial services industry incumbent platform state. For the purposes of the analysis, we dissected the levers into 7 components (vs. the four in the Platform Leadership book).

    Exploring Banking as a Platform (BaaP) Model fintech

    Because of current legacy mindsets and structures, a platform play would be very difficult to implement for the vast majority of organizations.

    Making a Platform Play in Banking Possible

    It is clear that any success in developing a platform strategy for banking (BaaP) will be largely dependent on wholesale cultural and technology mindset changes. Traditional business models are far easier since banks are in full control. Financial services industry incumbents created products and sold them to their customers. Value was produced upstream by the banks and consumed downstream by the consumer.

    Unlike traditional models, a Banking as a Platform structure does not just create and push products. The BaaP structure allows users to create and consume value. At the technology layer, external developers can extend platform functionality using APIs. At the business layer, users (producers) can create value on the platform for other to consume.

    This is a massive shift from any form of financial services model that exists today. Creation of network effects is more important than simply bringing in users or charging all users to make money.

    In this model for financial services, software and technology are not the end product. Instead, they simply serve as the underlying infrastructure that enable users to interact with each other. Most importantly, the business itself doesn’t create all the value.


    This post originally appeared on The Financial Brand in a different format


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