Competitive Collaboration in the Fintech Age


“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

The Sun Also Rises, Ernest Hemingway, 1926.

Inflection Point

After three-and-a-half years of helping build and scale AMP Credit Technologies – first as head of product management; then as head of strategy & corporate development – today marks my penultimate day with the company. Next month I’ll take on a new challenge: as Asia-Pacific Leader for Ernst & Young (EY).

From the outset, our thesis at AMP was that enabling incumbent (or at least those with the capability and willingness to work with startups) was preferable to competing with them – that combining our respective strengths would allow for greater scale and performance than competition and disintermediation. To be sure, we first had to build and demonstrate the efficacy of our alternative lending platform by putting our own money in the market (four separate markets, to be precise) as the ultimate “proof of concept”. Once that was done, and the results made clear, we knew that we’d be in a position to enable the more forward-looking banks to profitably provide unsecured credit to traditionally under-served small businesses. A similar thesis had informed our approach at Realex Payments – the European ecommerce payment gateway (since acquired by Global Payments, Inc.) which combined direct-to-market customer acquisition with white-labelled full-service delivery for partner institutions.

Competitive Collaboration

At its simplest, the thesis is that existing financial service providers have key competitive advantages relative to most challengers – not least those pertaining to cost of capital, data, distribution, and often (though not always) regulatory certainty. Conversely, the better fintechs are typically those that capitalise on their advantages relative to speed (both of decision-making and of action), organisational agility, and a demand-led focus on transparency and customer experience.

With experience on both sides of the table, it is my sincere belief that the greatest opportunity lies not in all-out competition but in a form of “competitive cooperation” between incumbents and fintechs. Indeed, despite the often confrontational rhetoric, many fintechs are already heavily dependent on the existing banking and payments infrastructure. In addition, I’m confident that we’ll see increased collaboration between fintechs (both early- and growth-stage) as they seek horizontal and vertical reach via international partnerships and product bundling, respectively. Finally, I expect ever-more collaboration between incumbents as they seek to acquire or maintain product and geographic coverage without having to build it themselves (with all the capital and regulatory considerations that would entail) – or simply as a means to pool technical knowledge.

Building solutions for banks and non-bank financial institutions has taught me that most incumbents are not prepared – technically, organisationally, culturally – for working with startups. Conversely, as an active member of the startups community (both as mentor and investor), I’m also fully aware how unprepared many startups are for working with incumbents. Both sides require support in addressing the challenges and opportunities of service un-bundling and re-bundling, of customer dis-aggregation and re-aggregation.

The Fintech Age

The application of to financial services has historically been the preserve of established incumbents or their largest technology vendors. More recently, the ever-increasing availability of and access to inexpensive distributed computing power (and data analytics) has allowed new entrants to develop services and scale at unprecedented speed – thereby heralding a new ‘Fintech Age’. When considered in light of the regulatory changes of recent years and evolving customer expectations, it’s not hard to see why traditional financial services are being decoupled and in some cases displaced.

While there are certainly common characteristics to the rise of fintech as a global phenomenon, there are also environmental factors unique to Asia-Pacific. The global financial crisis – which simultaneously contributed to greater regulation and the retrenchment of global players – had rather different impacts in Asia than in the US or Europe. Correspondingly, the response of both governments and markets has been different. Added to this, we have the sheer size of the markets in Asia (whether of the traditionally unbanked or growing middle classes), their diversity, the absence of common platforms, the ascendancy of the mobile internet, and the associated opportunities (or necessity) for technological “leapfrogging”; these are the features that make Asia-Pacific the most exciting region in the world when it comes to new-form financial services. Mainland China, for example, is undoubtedly the world-leader when it comes to advances in alternative credit scoring, frictionless payments, and social commerce. Clearly there is much that each region can learn from the others.

Pastures New

And so it is that I move into a new role – one focused on driving collaboration and competition across verticals (banking, insurance, telecommunications, etc.) and throughout the region. As Asia-Pacific Fintech Leader it will be my responsibility to help EY clients (both current and future) navigate these new-form challenges and opportunities, while creating an environment of cooperation and collaboration across the spectrum. I’m determined to move past the current trend of marketing-led “collaboration 1.0” initiatives to more nuanced partnership offerings and real open innovation – with the incentives of all parties aligned from the outset. I expect to focus less on brand-building and more on advising clients on strategic partnerships and targeted acquisitions. The overriding objective will be to separate reality from hype, signal from noise.

I look forward to working with like-minded individuals – in industry and venture capital, in government and regulators, in startups and growth-stage innovators – to foster an environment of mutual advancement. I even hope to work with other service providers in this new era of “competitive cooperation”, wherein a rising tide will surely lift all boats.

Just as we’ve seen a new generation of fintech entrepreneurs (typically with a background in financial services) so too will we see a new generation of trusted advisors – those with the requisite knowledge, experience, passion, and excitement to address the challenges and opportunities of the Fintech Age.

Financial services is about to change in two ways: gradually and then suddenly.

[linkedinbadge URL=”” connections=”off” mode=”icon” liname=”James Lloyd”]  is Asia-Pacific FinTech Leader @ EY and this article was originally posted on linkedin