Americans are quite happy to look at #nonbank #lenders for #their borrowing needs, but that doesn’t necessarily mean they distrust #banks. A recent J.D. Power survey of small business owners released some startling figures — startling to banks, that is. Most #borrowers, specifically small-business borrowers, consider nonbank lending options for their financingRead More
Bank Innovation
#Peer-to-Peer Lending is emerging in #India and will be successful if the Credit quality on these platforms have a reasonable default rate and provide good returns to the lenders.
Peer-to-Peer Lending is a new asset class and it is important to create Awareness, Education and Understanding for lenders on how to proceed further to add #P2P lending in your investment portfolio.
At Citibank Consumer Bank, where I worked for close to 20 years, I learnt a concept of “Negative Self Select”.
In simple terms “Negative Self Select” means customers who choose your product and brand have poor credit track record. If most of the poor credit profile are choosing your product or brand your portfolio quality is bound to perform poorly over time compared to the industry peers.
Then the question arises, What leads to “Negative Self Select” ?
As a Bank, we used to have 3 key criteria to understand if we were a potential target of “Negative self select”.
They were:
These 3 criteria could work in combination or stand alone. It is quite logical that the best customer would not want to be inconvenienced by Heavy documentation, wait for long or pay higher cost for borrowing until and unless s/he does NOT have a choice.
Only, poor credit quality customers would go through these inconvenience as they do NOT have a choice.
However, for Peer-to-Peer Lending platform there are 2 more challenges:
At Monexo (http://www.monexo.co/in), we have solved for all of them before we launched our platform, namely:
We are building a new paradigm for borrowers and lenders with our 3D’s – Digitial, Data Science and Democratisation of Finance at Monexo (http://www.monexo.co/in). Visit us, talk to us and engage with us in our vision of “making borrowing more affordable and investing more rewarding.”
Attracting US$ 19.1 billion in investment in 2015, #fintech firms are growing fast. As customers are increasingly relying on financial services provided by non-traditional providers, #banks are #gearing up for #digital #disruption of the industry, according to a new report by #Swisscom’s e-foresight and Sourcing Competence Center of the University of Saint-Gall and Leipzig.
Peer-to-peer payment has been a hot topic in Switzerland, notably since the launch of Twint and Paymit. But despite the buzz, volumes of mobile payments remain small, growing at a slow pace.
Nevertheless, over 50% of banks believe that mobile contactless payment methods will become popular in the near future. Peer-to-peer services and contactless payments methods will continue to evolve, grow and remain an opportunity for financial services firms, the #report says.
92% of respondents said that online onboarding will be crucial for banks in the near future. In March, the Swiss Financial Market Supervisory Authority (FINMA) passed new rulings aimed at reducing obstacles to fintech, among which a circular on video and online customer identification to allow financial intermediaries to onboard clients by means of online and video transmission.
A report by Signicat released in April argued that customers are feeling increasingly unsatisfied with banking onboarding processes which are often considered frustrating and time-consuming. Customers are demanding 100% online processes, the study found.
According to the Swisscom survey results, banks are confident that digital assistance, #robo-advisory, payments and financing are the areas that will be the most impacted by fintech solutions.
Qualifying robo-advisors as one of the key innovations in the sector, the report advises banks to identity their target groups for such services and start elaborating a strategy.
Despite Switzerland&8217;s relatively small crowdfunding sector when compared with the likes of the US and the UK, the industry has been growing steadily since 2014. The report cites the launch of crowdfunding platforms by a number of banks as well as the increasing number of collaborations between startups and financial institutions in the areas. It further notes the emergence of innovative solutions such as real estate crowdfunding and predicts notable growth for SME lending and financing.
Banks named the most disruptive technologies in the industry as being mobile terminals, biometric authentication, cloud computing and Big Data.
Earlier this week, the Swiss government announced plans of policy changes to boost competitiveness of the country&8217;s financial industry. Notably, the Swiss Federal Council released a report on a “future-oriented financial market policy” that would allow foreign banks to open in the country. The legal framework is expected to encourage the fintech sector and sustainable investment.
&8220;A stable and competitive financial sector that functions well is a mainstay of the Swiss economy. The Swiss financial centre should continue to assert itself as one of the world&8217;s leading locations for financial business and even be able to strengthen this role,&8221; the Council said as quoted by Out-Law.
The move came a month after Switzerland&8217;s financial regulator FINMA has signed a fintech cooperation agreement with the Monetary Authority of Singapore (MAS).
The agreement aims at providing a framework for fintech companies in Singapore and Switzerland to expedite discussions on introducing new products into each other&8217;s market and understand regulatory requirements.
MAS has signed similar fintech agreements with the Korean Financial Services Commission, the UK financial authority and the government of Andhra Pradesh.
Featured image: Wireless technologies by ESB Professional, via Shutterstock.com.
The post Swisscom Fintech Report: Banks Are Gearing Up For Digital Disruption appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
A recent report by the survey software provider SurveyMonkey indicated that #mobile downloads for the bank had dropped 7.7% since the cross-selling scandal broke, while the other megabanks saw increases. So, while Chase, BoA, and Citi saw growth within the expected range for their app downloads after the scandal, onlyRead More
Bank Innovation
Image source Eons ago I managed a sales team that sold core banking systems to global #banks. One sales guy was consistently the best performer. I decided to find out his secret to teach it to the rest of the sales team. He had found a report that senior managersRead More
Bank Innovation
I can remember sitting in conferences back in Australia during the “naughties” (2000 to 2010) and the talk was around which of the four major local #Banks was going to be the last to complete their #core banking replacement programs. It is the middle of the next decade and I think the count is two completed, one still in progress and one not started.
Having experienced the bruised ribs and black eyes from more than a few core banking system implementations, I can say with some authority that it is one of the hardest things to do in a bank. Apart from the #technology spaghetti that a core system replacement has to deal with, it is also a major transformation program, because it invariably ushers in numerous analogous process re-engineering and automation programs.
So if you are a bank and thinking about embarking on a core banking system replacement, you have to ask yourself whether this is the best focus of the majority of your investment capital and energy over the next three to five years or more.
I would argue that it is not, because of the race for scale, the imperative to digitalizeand the potential of #blockchain.
Scale is King
Back in the 1880s in the US, the Oklahoma Land Runs (https://en.wikipedia.org/wiki/Land_run ) saw settlers dashing out on horses, in wagon trains, or any transport they could find to put stakes in the ground and lay claim to newly opened territory. Within 24 hours of each run, thousands of settlers had laid claim to packets of land, but the slow and the indecisive missed out.
The modern-day equivalent of the land run is happening today, but the real-estate of the #digital age is customers. Alibaba is leading the “customer land run” across Asia. They have rapidly accumulated hundreds of millions of customers across China, and are already pushing out for new claims across Southeast Asia.
Alibaba’s investments in Paytm and Lazarda are prime examples of its drive for scale. Both take-over targets had been running loss-making business models focused on customer acquisition. In 2015 Lazarda for example had over a billion dollars in sales, yet by the time Alibaba bought them out they were close to burning through their entire 2014 $250m cash injection.
Alibaba paid $500m to buy out most of the existing Lazarda investors and tipped in another $500m to turn that stake into a majority controlling interest. They weren’t buying a great technology platform (Alibaba already has that) and certainly not a profitable business model. They were buying customers.
But why pay such a premium? Surely Alibaba could have competed head to head with the likes of Lazarda and won over customers?
The answer is that this is a land run. Alibaba want scale and they want to lay claim to it before their competitors do.
If you look at Ant Financial’s own publications and beyond, (http://www.alibabagroup.com/en/ir/pdf/160614/12.pdf ) the competitive advantage that scale gives them in terms of customer analytics and marketing is clear. If you read between the lines you will also see that there is an even bigger prize to be had with scale.
Alibaba’s customer numbers and payment transaction volumes are rivaling those of Mastercard and Visa. This is significant because the major credit card schemas used to rely on a combination of pipes (the need for physical cards, POS terminals at merchants and secure connections via banks) and volume as barriers to entry to protect their businesses. Smartphones and apps have removed the need for bespoke pipes, so the only barrier to entry now is volume, and Alibaba is breathing down the schemas’ necks.
It is not only the credit card businesses whose revenue is under threat; it is also the banks. Combating the threats of the customer land run is probably a more pressing problem to tackle right now than any core system replacement.
Customers want digitalization
As I noted in a recent article, there are multiple imperatives for banks to undertake digital transformations, but the most pressing of them is customer expectations. While there is no doubt that end-to-end digital solutions are required to take full advantage of the efficiencies and scalability that digitalization implies, for banks sitting on legacy core banking systems I think there is a strong argument now to “fake it until you make it” in terms of digitalization. A lot of customer-facing digital transformation can be undertaken while sitting on legacy platforms, and you are more likely to lose customers because of a lack of digital engagement than you are because of poor-performing back-end systems.
Blockchain is real
I have to admit that I have been a blockchain skeptic for some time, but I am changing my tune. The real prize of blockchain in my opinion is not so much the crypto-currency facilitation. For me it is the distributed ledger capabilities.
Wells Fargo and CBA just recently announced their joint experiment to use the blockchain’s distributed ledger to facilitate a trade finance deal. (http://fortune.com/2016/10/24/commonwealth-bank-well-fargo-blockchain/ )
The blockchain is the perfect adjunct to trade finance transactions, and once trade finance gets settled there, other ledger-based financial transactions will soon follow. So if you are a bank thinking about buying the latest core banking suite from one of the leading vendors, now would be a good time to hold off and hopefully leapfrog to a blockchain-based solution in three to five years (my guess on the gestation period for the new breed of blockchain-based core systems).
Peer-to-peer #lending, which aims at shaking up the banking market and attacking one of the core profit-generating activities of #banks, is not likely to #displace banks from their core roles of lending to retail consumers, according to a report by Deloitte.
Peer-to-peer (P2P) lending, also referred to as marketplace lending, leverages digital platforms and modern #technology to cut out the middle man and provide better rates of interest to lenders and borrowers.
Despite the promising outlook, the P2P lending industry has recently come under fire as Renaud Laplanche, CEO of Lending Club, one of the leading platforms in the US, was forced to resigned after the company revealed that it had provided mis-assessed loans to Jefferies and Co., which was distributing the loans to institutional investors, reports the Wall Street Daily.
The news was followed shortly by a report released by the US Treasury that warned about peer-to-peer lending businesses, recommending it to be more tightly regulated.
The skepticism over P2P lending has also been felt in China where loan sharks have been widely criticized for practicing aggressive debt recovery tactics, demanding for instance nude photos as collateral from female borrowers for blackmail if they fall behind on their repayments, reports the Financial Times. Other disturbing debt recovery tactics in China include property destruction and bodily injury.
Bankruptcy lawyer Han Chuanhua of the Zhongzi Law Offices in Beijing, told the media outlet:
“If they borrow from banks there is no threat to personal safety. But if they borrowed from private lenders, especially high-interest lenders, it can happen. […] If they can’t repay sometimes the high-interest lender sends people to their homes. Mostly they threaten, but sometimes they take action. These types of people don’t go through legal channels.”
While P2P lending has enabled the masses to gain access to #credit and investment opportunities in China, the sector has nevertheless a Wild West aspect with lenders reportedly peeking in bathrooms in order to assess credit risks and borrowers settling payment obligations with bottles of spirits.
Despite the struggles, the industry continues its path to maturation with notable initiatives emerging to structure and legitimize the practice. For instance, the Marketplace Lending Association, launched in April with the purpose of promoting responsible business practices and sound policy to benefit borrowers and investors.
A similar organism exists in Switzerland called the Swiss Crowdfunding Association and counts among its members the likes of Advanon, Cashare, Lend, Swisspeers, WeCan.Fund, Crowdhouse and CreditGate24.
Launched in March 2015, CreditGate24 connects borrowers directly with private and institutional investors. During its first year of operation, CreditGate24 enabled more than 270 credit projects without any failure.
The company performs strict credit checks based on traditional methods with use of Big Data analytics.
Yet, P2P lending remains a risky bet compared to other savings and investment options, according to Deloitte. However, it highly depends on the market. Switzerland seems to be a very attractive destination. The country is known to be very reliable and strict in credit-#Risk #Management and investors can get attractive yields with the likes of CreditGate24 and others.
Featured image: Hand shake by Bplanet, via Shutterstock.com.
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Digitization of the #banking industry is making new banking business #models possible. But, it is the combination of regulation and #technology that is making new business models a necessity.
There are 4 strategic options open to #banks, shown below. These vary in terms of the scope of banks’ own activities as well as in terms of profitability. The traditional universal banking model and the infrastructure provider model are both asset intensive and low margin, which makes them unattractive.
In addition, the universal banking model, in that it requires the bank to manufacture and distribute all of its products, is probably unsustainable. The aggregator model, top left, offers the possibility for very high profitability with low asset intensity, but will be difficult to defend. Thus, it is the vertically integrated but open platform model which offers the best route to sustainably high margins.
From a producer to a creator economy
If you have a spare 90 mins, you should definitely check out this presentation from Paul Saffo which gives an interesting take on the economic history of the last 120 years. Paul argues that the first part of the 20th century was the “Producer Economy”, where economic efforts were employed in systemizing production, organising people and capital in the most efficient way possible to overcome scarcity.
The most iconic image of this age is the Ford Model T, available in any colour as long as it was black. But, the peak of the producer economy came with the Second World War when the US economy was able to produce 8 aircraft carriers per month and a new plane every 15 mins.
Post the Second World War, the “Producer Economy” gave way to the “Consumer Economy”, where scarcity moved from production to desire and where it was necessary to foster the latter through advertising and credit. The peak of the consumer economy came with the financial crash of 2008 when the economy couldn’t be leveraged up anymore.
Today, Saffo argues, we are in the “Creator Economy” where the scarcity is consumer engagement (a “poverty of attention”) and the means to overcome it is to offer services through platforms, where the consumer becomes at once a producer and consumer.
Making the consumer a creator produces network effects, where the consumer’s input makes the product better – like Facebook where more users means more content and interactions attracting more users &8211; and leads to a positive feedback loop of increasing customer numbers and increasing engagement. The only way to stop the increasing returns to scale and tendency to monopoly in the creator economy is to create better platforms, as MySpace, Yahoo and other companies stand testament. Which is why, incidentally, Europe needs to get busy developing platform companies rather than trying to legislate against the ones that exist.
Banking in the context of the creator economy
How well does this model of economic history explain the evolution of banking over the same period?
Well, the first observation is that it is only really a model of the developed world, not the developing world. In the developing world, there is still a scarcity of banking provision as evidenced by the 2bn adults who don’t have access to banking. However, digitization is also helping to solve the problem of financial exclusion, by lowering the cost of banking and making it accessible anywhere and anytime (increasing the supply of banking to a point where the price meets demand).
But, as regards the developed world, Saffo’s history reflects very well the changing role of banking. Given the pivotal role of banking in underpinning growth in the “Consumer Economy” – underwriting the sustained rise in demand for consumer goods and, then, for housing (which successive rounds of de-regulation were happy to fuel) &8211; it explains why banking became so oversized relative to historical norms and relative to other sectors of the economy.
For example, in 1945, the year the Second World War concluded, financial services made up 2.1% of US GDP. In 2007, the year before the financial crash, financial services constituted 7.6% of the US economy. Similarly, in 1979 (the first year for which data is available), financial stocks represented 6.1% of S&P500 compared to 22% in 2007.
Seen in this context, it seems obvious that what we are seeing in terms of banks scaling back their activities and reporting lower profits is not solely the cumulative result of new regulation, changing competition and cyclical factors such as lower interest rates. Structurally, in the Creator Economy, we do not need such a large banking sector. And, in fact, banks have historically not provided many of the types of finance we need today, such as venture capital to start-up businesses, another reason why traditional bank lending is shrinking relative to alternative sources of business financing.
Not only is banking going to be a relatively smaller industry in the creator economy, but it’s going to have to evolve a lot to stay relevant.
The technology driven change
Banking is subject to the same technology-driven change as other industries and which make a creator economy possible. The internet has provided a platform for distributing goods and services that is global and cross-industry and which can be divorced from manufacturing, opening up banking to outside competition, especially from internet platforms.
Advancements in data science and AI make it possible to give faster and constantly-improving levels of online customer experience across much larger customer numbers, meaning companies with the best algorithms – and especially the most data – can dominate. And mobile has grown internet usage while simultaneously increasing the amount of time we spend online, making this the pre-eminent channel for customer engagement and extending the rewards to the platforms that succeed.
A new regulatory regime
But, as a heavily-regulated industry, regulation also plays a very important part in determining banking business models. It is the combination of new technologies and new regulation that is making new business models a necessity rather than just a possibility.
The open banking initiatives such as PSD 2 in Europe, which obliges banks to share customer data with third party providers where a customer requests it, are intensifying the battle for distribution which technology changes had already initiated. From 2018, aggregators can get access to customers’ transactional data via APIs. This will put them in a position to give ex ante recommendations based on customers’ spending behaviour which before would only have been possible by acquiring that data through some other means, such as offering a payments platform (like Apple Pay).
On the other end of the scale, system safer directives such as Basel III, by forcing banks to set aside larger capital buffers against risk weighted assets, have the effect of making regulated banking activities more expensive (and so likely to be provided increasingly by large-scale domestic commodities – see below) and pushing riskier activities outside of the banking industry. In many areas of banking, regulatory arbitrage is likely a bigger advantage to newcomers than faster adoption of new technology .
Other new rules, such as the transparency directives like MiFID II, are also likely to have impacts on business models at once encouraging consolidation among fund providers while opening up a bigger opportunity for automated investment services.
New strategic imperatives
Against this background of changing regulation and changing technology, banks must appraise the ongoing viability of their business model. In effect, we believe that all banks will be forced to adopt one flavour of the following four business models.
Do nothing
The first option is the ‘do nothing’ option. While this may be tempting, in common with so many industries undergoing change, this option is the most dangerous.
Most banks operate a full-service model today. That is, they provide retail or corporate customers with a current account and a range of own-labelled products and services on top, such as mortgages and credit cards.
The problem with this model is that there is a proliferating number of providers at every point in the value chain offering individual products at a lower price point, with less friction and better customer service. Trying to compete with these providers is impossible because of legacy software, but also because it would unpick a web of cross-subsidies where profitable products prop up unprofitable ones.
Rather than wait for this unsteady edifice to come crumbling down, banks should rationalise their products offering, concentrating on areas where they command competitive advantage or areas that are highly strategic (see later).
Become an infrastructure provider
Another option is to become a service provider to other banks or #fintech companies, as banks such as Bancorp and Solaris have opted to do.
The value proposition of such a model is to eliminate the need for others to engage in heavily regulated activities and take on the associated compliance burden, or – for a new entrant – even to have to apply for a banking licence at all. As noted earlier, regulation is pushing up the cost of doing regulated business and of compliance in general.
Such a model could be lucrative if the provider is able to achieve significant economies of scale, spreading the fixed compliance costs across a much larger volume of business. And such businesses will be run in the cloud to take advantage of the scale economies of shared infrastructure.
However, since the services provided are commodities and there is no room for network effects (where more users of the services makes the services better), this will not be a high margin business. What is more, since regulation is making cross-border activities more expensive, these infrastructure providers are likely to be domestic champions. How many providers can operate this model will depend on minimum efficient level of scale and whether there are limits to scale economies.
Aggregator
A more profitable model to operate would be one of aggregating financial services.
In such a model, a bank would turn itself into a distributor of financial services products. That is, a bank would not manufacture financial products and services but instead source them from an ecosystem of partners. In this way, the bank does not have to incur the costs of manufacturing products or compliance and can also provide customers with access to a broader range of products than if the bank tried to produce everything itself.
In order to make this model successful, the bank needs to become a virtual advisor, using customers’ data to help them make better financial and operational decisions – effectively providing a customer with the right advice and/or other service at the right time and across the right channel for the customer to act smarter. The bank monetizes this service, inter alia, by taking a small fee on all of the products and services the customer uses.
For a long time, the challenge to operating such a model was not technology – mobile has already opened up the channel to do so – but data. Without access to customers’ transactional data, it was difficult to provide truly value-added advice: for example, helping customers to set savings goals is much less useful if you can’t also help them to make savings. But PSD 2 is changing that by allowing third parties access to banks’ transactional data records. Now, internet platforms can add transactional data to the stores of contextual data they hold to be in a position to give very timely and relevant advice. Price comparison sites will be able not just to help you find the best deal, but tell you when you are eligible for such deals.
PSD 2 has effectively made banks online addressable in the same way that smartphones with GPS made the taxi market addressable to Uber or every home having a DSL line made AirBnB possible.
The aggregator model is definitely a model for the creator economy. A bank gains customer engagement by working with customers, helping them to better understand their financial affairs and the options open to them, but ultimately empowering them to make those decisions –making them a co-creator.
As a model for the creator economy, the aggregator model can be extremely lucrative. Operating such a model, a bank can generate massive economies of scale by potentially servicing millions of customers from the same software platform. But also, as a platform, there is the potential to generate network effects that could lead to increasing returns to scale.
Firstly, there are the two-sided network effects whereby larger customer numbers leads to a larger number of ecosystem partners which then, by offering the widest choice, attracts more customers and so. But, there are also the data network effects, whereby the bank learns more about how best to serve customers the more data it captures meaning it gives better and better services, attracting more data and so on. If the bank also opens up its platform for customer interactions with each other – with peers giving advice to each other, for example – then there are also interaction network effects enjoyed by the social network platforms.
The challenge with banks opting for the aggregator model is that it is difficult to argue that others couldn’t do it better.
Thin, open platform
A better strategic move would be to pursue a model that enables banks to both capture network effects and capitalize on their existing competitive advantages.
Banks competitive advantages are still numerous: trust (not as much as pre-crisis, but still more than many potential competitors), large customer bases, lots of data, strong execution capabilities across the value chain, access to cheap deposit funding and plenty of capital.
Moving to an aggregation-only model would mean leaving many of these advantages behind.
So, a better model would be a vertically integrated but open platform. It would be vertically integrated to take advantage of banks’ execution capabilities and by extension their ability to offer superior levels of customer fulfilment (a key reason why Amazon is becoming more vertically integrated). However, it would be vertically integrated but thin with banks only offering a small number of own-labelled products where these are strategically important like current accounts (for data, cheap deposits) and payments (data) or where banks have a competitive advantage (like secured lending). And the platform would be open to allow banks to offer products and services from third-party providers, as in the aggregator model, but as a vertically integrated regulated bank could be delivered faster and with less friction.
As we wrote recently, the theory that the internet giants are asset-light distribution platforms is wrong. Many started out as such, but few stay that way. What most tech companies find is that to maximise their success, to generate greater network effects and to prevent losing out to new platforms, they need to acquire many assets and, in many cases, become more vertically integrated.
PSD 2 has kicked off the platform race. Banks need to open up their distribution channels, to become aggregators, to have any chance of competing effectively. But, their best bet is to combine open distribution with the provision of a few strategic services sitting on top of a vertically integrated infrastructure. This seems the best way for banks to thrive in the creator economy.
This article first appeared on LinkedIn Pulse
The post 4 Banking Business Models For The Digital Age appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Latest #FinTech to be launched, based in Geneva, SwissLending allows developers to complete their funding directly from individuals in search of attractive returns on unique and visible projects
SwissLending, a new player within the FinTech ecosystem and the first crowdfunding #platform in #Switzerland specializing in loans for #real #estate professionals, was officially launched in Geneva.
Activity began in early 2016 to test the procedures implemented by the company. Two transactions were completed successfully in Lancy, Switzerland and Villiers-sur-Marne, France, for a total amount of funds raised over CHF 1.1 million.
Globally, the crowdfunding industry had grown to approximately $ 34.4 Billion (yes, with a “B”) by the end of 2015, according to the study published by Massolution. Looking at those numbers by market segment, two stand out in terms of volume: lending to businesses and individuals, and real estate crowdfunding.
The latter, growing rapidly, is valued at $ 2.57 billion in 2015, but this sector is still in its infancy in Switzerland. As exposure and education increases, so will the size of the market.
In practice, the level of equity is the Achilles heel of a promoter seeking growth. Promoters currently face two major and recurring problems: longer product cycles (almost systematic recourses on building permits) and increasing capital requirements asked by their banking partners.
These two phenomena cause the slowdown of development of new real estate operations. #Crowdlending is the opportunity to address this downturn by offering developers additional funding in complement to that of the #banks.
In the property sector, the crowdlending revolution is even more active as real estate investing has always been reserved to institutional investors and UHNWI. The need to democratize the offering, generally considered rewarding (yield from 6% to 12%) and with controlled risk, is the purpose of SwissLending.
It will place the investor at the heart of projects’ financing of public utility – the construction of housing, offices &8211; with high added value. The funding lasts only a few months and is reimbursed at the completion of the construction and sale of the lots.
In summary, the historical funding model of real estate transactions is not as dynamic as it once was. Banks are more cautious and the cycles of real estate transactions are longer. Real estate crowdlending is an innovative financing alternative, and an interesting source of profitability for developers and investors.
The post A New Real Estate «Crowdlending» Platform in Switzerland appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
External forces from demographic, social, economic and regulatory phenomena have contributed to one of biggest revolution in the banking world: the emergence of #challenger #banks.
Digitally-focused challengers such as Atom, Fidor Bank, Mondo and Starling, have grown significantly in 2015 and 2016, fueled by changing customer expectations, the new Generation Z, the heavy smartphone use in accessing finance and emerging technologies.
Most of the innovation around #fintech and challenger banks have occurred in regional hubs and heavily supportive countries and environments, according to a new #report by Burnmark, including the UK and the US.
“The UK holds the first mover advantage as a home for challenger banks, but new geographies are gaining ground with support from government, regulators, investors and entrepreneurs,” the report says.
&8220;The US, Singapore and Australia, in particular, are actively competing to create best-in-class financial innovation ecosystems and are increasingly progressive in their use of government and regulatory policy to support challenger banks.&8221;
In early 2014, the UK Financial Conduct Authority launched the Project Innovate to support regulation for innovative businesses. Singapore has a £100m financial sector #technology and innovation scheme and Australia has announced a £500m national innovation and science agenda.
The UK also leads in terms of fintech investment, having generated £524 million in 2015 compared with £3.6 billion in California and £1.4b in New York in 2015. The country has an unrivalled lead in terms of financial expertise, employing 1.2 million people in the financial services industry.
Following the UK, Singapore has been increasingly active in policy and benefits to make it an attractive fintech hub. In November, the Monetary Authority of Singapore, the country’s central bank and financial regulator, will organize the week long Fintech Festival which will bring together policymakers, fintech experts, entrepreneurs and VC to discuss the future of finance.
MAS has also opened its fintech innovation lab called Looking Glass @ MAS to experiment fintech solutions with financial institutions, startups and tech vendors.
According to the report, the emergence of challenger banks are &8220;multi-fold&8221; and dependent on the regions they belong to. For instance, in developed markets, challenger banks are gaining prominence due to the underlying inefficiencies of the incumbents in service the customer in the best possible and transparent manner.
Emerging markets on the other hand are looking at challengers as a medium to accelerate banking innovation as well as financial inclusion. With mobile penetration increasing significantly in these locations, banks utilizing digital channels to onboard, engage or serve customers are evolving to become an important medium for financial inclusion initiatives.
Notable ventures include Abacus, a digital bank backed by a UK-based private equity firm AnaCap; Metro Bank, which implemented Backbase’s Omnichannel Banking Platform for its digital banking front-end, FIS/SunGard’s Ambit Asset Liability Management solution and outsources mortgage processing to BancTec; Monzo Bank, which has been built on open source stack including Linux, Apache Cassandra, and Google&8217;s Go programming language; Secco Aura, which uses a distributed database similar to the #Bitcoin #blockchain which allows data to be stored on customer&8217;s devices as well as the bank; and Tandem Bank, which uses FiServ&8217;s core banking and its Agility platform on SaaS.
Featured image: Bank via Shutterstock.
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