Isle of Man Tests Blockchain Prototype for IoT
The #Isle of Man has announced an Internet of Things proof-of-concept in partnership with #blockchain startup Credits.
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Institutional vs. Crowdfunding: Why Institutions Trump “The Crowd” When it Comes to Raising Growth Capital
I am a big proponent of #crowdfunding. Unfortunately, equity crowdfunding is still experiencing the growing pains of a nascent industry. That does not mean the promise of crowdfunding as a better, more efficient means of #capital formation remains unfulfilled. I am yet hopeful the future is bright, particularly when itRead More
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Payments Firm Qiwi Could Transition to Blockchain By 2021
Russian #payments #firm #Qiwi now estimates it #could upgrade its core database to a distributed ledger-based system by #2021.
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Australia’s Postal Service Tests Blockchain Identity
Australia’s state-owned #postal #service is now looking at several #blockchain applications as part of an internal accelerator program.
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GoBank for Uber Revs Up
#GoBank launched an account for the “gig economy” in March, and its first test case was the rideshare giant #Uber. Yesterday, for the first time, Green Dot, which owns and operates GoBank, revealed some usage numbers on the accounts. The program is used by 80 thousand drivers, Green Dot CEO Steve StreitRead More
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Fintech Food for Thought
Statement: It is cheaper to create a #fintech startup today than 15 years ago, yet very few fintech startups reach escape velocity and have been able to build a sustainable business yet. There are plenty of fintech unicorns but there is only one PayPal to date.
Question(s): Does the fintech startup scene obey an even more severe power law of success or is it too early to tell?
Statement: Financial Services incumbents continue to be hurt by a low interest rate environment that hurts their profitability and severely constrains them in the marketplace.
Question(s): Would a high interest rate environment limit financial services innovation to systematic progress, to the detriment of systemic progress? Would interest rates increases limit the ability disruptive fintech startups have at competing against financial services incumbents?
Statement: Incumbents notoriously do poorly with innovation. They are beset by agency issues, inflexibility, bureaucracy. They are also the first to retrench when failures arise.
Question(s): Will incumbents exhibit the same tendencies at such a pivotal point of transition to the new digital age? Or will they exhibit more resiliency as a matter of survival.
Statement: New technologies, new behaviors, new business models are giving rise to the omnipresence and the power of networks and platforms in an industry where very complex processes are the norm and where mastering these processes require depth and breadth of knowledge.
Question(s): Which is more likely, a) disruption coming from fintech startups alone, b) fintech startups failing to dislodge financial services incumbents, or c) collaboration between startups and incumbents?
Statement: Many fintech startups are building businesses in either fragile activities (lending) or “race to the bottom” activities (remittances, p2p payments)
Question(s): How difficult will it be for these startups to build resilient businesses long term? Will financial services incumbents be negatively impacted?
Statement: Most if not all financial services operations are eminently complex, standards and regulatory rules add to the cost of doing business, even more so when cross border processes are taken into account.
Question(s): Does this mean the capital requirements to build a sustainable fintech startup at scale – and the current size of financing rounds &8211; is too high or too low? How will financing rounds size trend going forward?
Statement: Financial services incumbents boards are light on #technology gravitas and knowledge. Fintech startup boards are light on deep financial services knowledge and understanding.
Question(s): Which will close the knowledge and experience gap first? Can the gap be closed?
Statement: Innovation is about taking risk. Running a financial services business is about managing risk.
Question(s): Can these two activities be reconciled? Under what circumstances?
Statement: The financial services industry is undergoing profound change and is also under tremendous stress. #Banks, Insurance, Asset Managers are faced with existential threats &8211; real or perceived. Every participant in the industry is responding to change, even forward thinking regulators in certain jurisdictions &8211; UK, Singapore.
Question(s): Can financial services regulators avoid further change to their own business models? Can they get away with systematic change or will they have to contemplate systemic change? Are the equipped to innovate within their midst? What will be the consequences if they do not change and adapt?
Statement: Financial services participants such as PayPal in the US, Starbucks &8211; and others &8211; &8220;hold&8221; sometimes more money on behalf of their customers than certain banks do. These actors do not hold bank licenses nor are they subjected to the same level of scrutiny as banks.
Question(s): Will this trend increase, both in terms of quantity of money held and number of participants? If so, will regulators pay a closer look at these participants and will regulation take into account the weight these participants hold within the overall market structure?
Statement: Bank or Insurer owned Venture Capital firms invest with a strategic mandate. Independent Venture Capital firms are not encumbered but such constraints.
Question(s): Which yields the best outcomes? For investors, for the incumbent parent? Is it sufficient for a bank or insurer to own its own venture fund? Should it be better for a bank or insurer to invest in an independent venture fund? Would both owning a venture fund and investing in an independent fund be optimal?
Statement: Financial services incumbent IT/IS staff are usually convinced they are better at building new products, services, platforms. Fintech Startups are usually convinced they are better at going to market first.
Question(s): Which is the most value destructive behavior? Which behavior is the easiest to correct?
Statement: Fundamental and economically productive product or service or business model innovation in the financial services industry has been scarce- e.g. mortgages, ATM, securitization. Most innovation has benefited the speculating activities prevalent in asset management, trading, capital markets.
Question(s): Will new technologies and their application via fintech further this trend or invert it?
Statement: Many seasoned and reputable venture capital investors have gone on record stating corporate venture firms do not know how to invest and incumbents have a poor record with innovation. Most corporate venture capital investors are convinced fintech startups know little about the financial services industry.
Question(s): Which belief is the most erroneous? If true, which is easiest to upgrade?
Statement: In part due to local legislative and regulatory DNA, in part due to entrepreneurial genius, in part due to the size of their market, Chinese fintech firms (pure plays or children of Chinese tech giants) are ahead compared to their Western brethren. Further, based on recent evidence, cracking the Chinese market is a non trivial endeavor for a US or a European startup. US and European fintech actors do not enjoy the same advantages Chinese fintech actors do.
Question(s): Will Chinese fintech actors expand to Europe and the US? If so, how will Western regulators and legislators react? Will Chinese financial services markets mature to the point of being opened and interoperable with the outside world?
Statement: To date, the vectors of financial services industry disruption and innovation have been technology, a change in consumer and enterprise habits, the Great Recession, strengthened regulatory oversight, entrepreneurial spirit and a low interest rates environment. These have, to a large extent been forced upon the industry and its incumbents. Notably absent has been the political sphere &8211; executive or legislative.
Question(s): Will the political sphere engage with fintech and the financial services industry transformation? What will be the likely effects?
Statement: Fintech innovation needs both talent and capital.
Question(s): Which of talent or capital is more constrained? Are we faced with a demand or a supply issue? How will this change in the future?
Statement: Transitioning from the industrial age to the digital age induces profound implications. The way we organize ourselves, transact with one another, interact with one another are and will be drastically different. So will the skills, business architectures, mustering of resources and capital to sustain new models. Particularly so in the financial services industry. Incumbents have the advantage of political clout, access to high level spheres of power and decision making. Startups and entrepreneurs master the art of creation &8211; sometimes successfully. Be that as it may both need to see the future differently than they experienced the past.
Question(s): Is that transformation purely technology and business dependent? If not can either startups or incumbents transform the industry for the digital age without political leaders that understand what the digital age needs? Have political leaders emerged in any country or continent that understands the new age we are entering and its implications to the financial services industry and fintech as its enabler?
Statement: We are witnessing many changes within the financial services industry. Yet, Money, the concept of money has not changed for may generations.
Question(s): Should the concept of Money change? If not, why? If so, which is the most likely vector to effect a change; technology, politics?
You are welcome to come up with your own statements and associated question(s). Please comment and share.
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Capital One Joins Effort to Educate Seniors About Online Banking
#Banks only care #about millennials, right? Not really, though marketing about digital efforts may make it appear that way. Yesterday #Capital One, a leader in digital #banking, joined OATS (Older Adults #Technology Services) in launching‘“Ready, Set, Bank: #Online Banking Made Easy,’” an educational tool designed to increase online banking usage among older adults, enabling themRead More
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FinTech #Furniture, #Fashion and #Food
I have visited quite a few #innovation centres at #banks, accelerators, labs and #FinTech startup offices: from the highest floors of mighty skyscrapers in Manhattan, to the folksiest office spaces in suburban warehouses. Everywhere I met enthusiasm, imagination, desire, hard work and openness to discuss global trends and detect:
- what will stay about FinTech revolution, after initial bonanza;
- which #technology and business models will shape the world in 2020;
- recognise what can work well in China, but would be disputed in the US.
There are two major yet antithetic drivers that turn new FinTech ventures into successful businesses (hopefully unicorns): PERSONALISATION and COMMODITISATION.
- PERSONALISATION is the quintessential thing that Millennials buy and older clients want, and is the secret sauce to make digital experiences successful, sticky and relevant for customers.
- COMMODITISATION is essential to build scalable and successful businesses, that can grow fast and exploit the power of digital economies to reach out to long tail consumers at lower than ever costs.
Yet, as I sat down today at my own kitchen table to write this post, I serendipitously spotted a share by Richard Joye which appeared on The Verge: “How Silicon Valley helps spread the same sterile aesthetic across the world“. Indeed I faltered and thought how true it is!
So do not expect many more insights about innovation, disruption and digital trends in the remaining of this article. We are going to talk a bit about casa, moda and buona tavola in the world of startups! Notwithstanding so much travel, speaking at more than 30 banking and FinTech conferences a year … and living in Germany … I remain Italian, born in Milan … and I have a weak for dolce vita stereotypes: design, fashion and food.
Here three summer recommendations to all my Fintech friends:
- Ideas do not come out of the fridge.
- Don’t make clothes, dress women.
- Don’t eat social media junk food.
1. IDEAS DO NOT COME OUT OF THE FRIDGE
I happened to visit innovation labs at established banking institutions, and walk through rigorously decorated corridors just to feel amazed like Alice in the wonderland by crossing the last door, and find myself in front of super designed kitchens, see people playing table tennis, hear the latest lyrics of Taylor Swift (I know, Millennials account for almost 70% of Spotify clients).
True say, Bill Gates made his first Microsoft steps in a garage, Zuckerberg and fellow roommates in their dormitory kitchen at Hayward University. I also do most of my work as #book author in unusual places, like airplanes, my kitchen, the corner table of the Turkish bar which recently opened at the end of the street where I live. However, watch out! The FinTech world can be self-referential in many regards, and you risk to get trapped into a mechanism of emulation instead of autonomous innovation.
Here is the first recommendation: while it is convenient to work in the kitchen, ideas don’t come out of the IKEA fridge. So be DIFFERENT as much as possible. I don’t mean different from banks (that already comes by working in the kitchen …), I mean different from mainstream FinTech and its social media loudspeakers.
2. DON’T MAKE CLOTHES, DRESS WOMEN.
I find it fascinating to speak at FinTech conferences. The parterre is usually made of 80% FinTech entrepreneurs (wearing some sort of shabby cloths) and 20% bankers (in suits but without ties). While FinTech guys tell their audiences “HEY, I AM THE NEW MILLENNIALS-MINDED BANK“, bankers try to scream loud “HEY, I AM A TECHNOLOGY COMPANY NOW“.
Truth might lay in the middle, but one thing is certain: banks are still troubled banks, and FinTech companies are still fabulous software firms trying to use new technologies to service innovative business models. Since B2C businesses and revolutions are easier dreamt than won, most FinTechs’ future might feature their institutionalisation, as banks’ partners or service providers.
Here is the second recommendation: while it is cool to wear sneakers, a good woman’s wardrobe always features a Chanel. Fashion designer Valentino famously said “I don’t make clothes, I dress women”. So do the same: do not just build a Fintech, conceive a business which comes with genuine products, good pipelines, sound business plans and key partnerships.
If cloths don’t make the Monk,
FinTech attire doesn’t make the Unicorn!
3. DON’T EAT SOCIAL MEDIA JUNK FOOD.
The digital economy makes it truly possible to scale new businesses faster than ever across international borders, however “one man’s meat is another man’s poison“. I am fascinated during my travels and business conversations to learn what can work globally, and what instead makes sense only locally.
Here my third recommendation: copy and paste Silicon valley might not be a good innovation strategy that works everywhere. Luckily enough, you can eat a decent pizza almost everywhere. However, although Starbucks is a fabulous brand, it might work in the US but has not yet successfully landed in Italy. US might be an easier B2C market for #Robo-Advisors than continental Europe, because regulation, banking infrastructure and investors behaviour are not equal across the pond.
Copy and past Silicon Valley might not always
be a good innovation strategy
Elevator’s pitch to executive search companies: should you ask what is the role of a global FinTech though leader, here is what I do …
I sell the finest FinTech Furniture, FinTech Fashion and FinTech Food!
Read more about the topic? Check on Amazon my new book “FinTech Innovation: from Robo-Advisors to Goal Based Investing and Gamification“.
[linkedinbadge URL=”https://www.linkedin.com/in/paolosironipso” connections=”off” mode=”icon” liname=”Paolo Sironi”] is IBM Thought Leader – Wealth Management FinTech Analytics
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Realtime Banking
What happens when an unstoppable force meets an immovable object? The unstoppable force is customer expectation of real time, which we get from using email, text and social media. We are instant gratification junkies, like Veruca in Willy Wonka “I want it and I want it now”. The immovable force isRead More
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Amid Blockchain Hype, Is There Still a Place for Litecoin?
Once the “silver to #bitcoin‘s gold”, the developers behind long-running digital currency #litecoin are seeking to reestablish its market position.
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