E-Trade recently rolled out its new Adaptive Portfolio aimed at young professionals just beginning to face the financial struggles of adulthood. Adaptive Portfolio combines previously offered active and passive management with risk classifications that automatically rebalance to accommodate market changes. Users will also have the option to connect with financial consultants. Read More
The first #Fintech wave has passed its peak. OK, I know I’m not inventing sliced bread here, but if you are one of those people fervently expecting the buzz to translate into the full rebirth of traditional #banking anytime soon, well, you’d better hold your horses. Don’t get me wrong, the disruption of #banks’ business models is happening (and not only because of Fintech competition but also due to their high-friction distribution model based on branches, plus the negative interest rate environment and the post-crisis regulatory framework). But I guess such an industry disruption (whose outcome has still to be defined) won’t be an overnight process.
Managing expectations
In the last 18 months, Fintech has become way too hot, and we’ll probably be surrounded by this hype as long as the “banks”, “digital” and “disruption” combo keeps hitting the headlines. But those won’t be gaining momentum forever, especially once digitalisation becomes the new normal in the industry. Unsurprisingly, people tend to have over-expectations in the short run, especially those who are chomping at the bit to see banks under stress after years of turning their back on their customers and bailouts to the tune of trillions. But unfortunately, this is not the taxi industry and banks cannot be “uberised” as easily as other businesses. The disruption process in banking is not just about opening the business up to competition, but a matter of adapting and transforming the complex and very demanding banking regulatory framework along with banking infrastructures and payment networks. That’s one of the main reasons why the industry cannot be disrupted in a matter of 4-5 years.
The banking licence
So I guess the traditional landscape dynamics have not really changed. In the end, banks own banking licences that allow them to issue banks accounts, manage the payment infrastructures, take risk-free retail deposits (covered by the deposit guarantee scheme) and gain access to central banks’ liquidity facilities, without mentioning their too-big-to-fail unfair advantage. With retail depositors their main source of funding, their balance sheets are huge. Besides, as providers of bank accounts, banks de facto own the infrastructure, which means that Fintech firms still need to rely on them one way or another (at least until new regulatory frameworks show up).
Although the requirements for getting a licence are very high (which becomes an important entry barrier for Fintech. In the UK, it is considered that opening a new bank with a full banking licence requires 20M GBP up front), the obligations derived from it in terms of prudential regulatory compliance (e.g. capital and liquidity requirements) are also remarkable. That said, having a banking licence gives the company a reputational advantage relative to other financial institutions.
Living up to the standards
However, it’s amazing how the industry as a whole has been able to overcome all sorts of difficulties, creating a solid narrative appealing to consumers and investors. The Fintech business is not only about offering marketable products and services, but a commitment to values and good practices too. You just need to check out some Fintech webpages and customer feedback to notice that words such as “trust”, “transparency” and “simplicity” are constantly showing up. Apart from the reputational concerns, this reflects firms’ eagerness to differentiate themselves from traditional players in the banking ecosystem and to really put the customer at the centre of their work.
But this could be a double-edged sword. The fact that the whole industry lies under the same brand constitutes a great advantage for firms (especially start-ups) in need of reaching clients and raising funds. However, it also means that potential malpractices by specific firms are liable to ultimately harm confidence in other Fintech companies. For instance, we have seen how the stress episodes involving platforms such as Lending Club and OnDeck or the bankruptcy of Powa, have been used by some media to extrapolate these firm-specific problems to the whole industry. We’ve also recently experienced how some old-school brokerage firms are trying to position themselves as Fintech while their business model is based on screwing clients through opaque spreads and sales methods based on dumping.
Focusing on what really matters
Nonetheless, living up to these standards may be not enough. Some Fintech companies have been focused on gaining market share based on huge marketing spending without really creating new #technology and/or a defensible competitive advantage. This kind of “low-cost” positioning may work but for a very limited number of players. Generating value through new tech-oriented solutions should be the main target in the medium and long term for any firm seeking to consolidate in the market. We are now experiencing a reality check which will make the Fintech industry healthier, pushing companies to build unique and sticky technology and to collaborate with existing players.
In a previous post I argued that in the short run we are moving towards a co-petition (co-operative competition) model in which Fintech “stays at the mercy of banks, they [Fintech firms] disrupt banks on one side but they bring them business on the other side. In the end, banks still win.” But such a statement does not have to be valid for the long term – in fact, people tend to underestimate the impact of Fintech on the industry for the coming 10 to 20 years. It seems obvious that the complete digitalisation of financial services is unstoppable since customers are turning digital at an amazing pace (I have recently been told that 90+% of contacts with customers are now through digital channels even at savings banks) but the way this ecosystem will work and interact in the future is still to be defined.
In conclusion (and coming back to the title of the article), sooner rather than later the Fintech buzz will die, taking with it all the firms that have based their business on empty words. In contrast, those who create real and new technological solutions and products will stay alive, driving the long-term disruption that the industry needs. Besides, relying on this timeframe is not only a more realistic approach for evaluating the real impact of Fintech, but also a medicine against the potential frustration that could otherwise be caused when the short-term hype passes.
[linkedinbadge URL=”https://www.linkedin.com/in/philippegelis” connections=”off” mode=”icon” liname=”Philippe Gelis”] is CEO at KANTOX, disrupting the financial industry
#BAFT‘s newly launched Innovation Council makes serving its members #blockchain needs a top priority, and that won’t likely change anytime soon.
fintech techcrunch
Ralf Keuper
Die Frage steht schon seit längerer Zeit im Raum: #Benötigt ein #Fintech-Startup, um auf Dauer erfolgreich zu sein, unbedingt #eine #Vollbanklizenz?
Sagen wir mal so: Wenn ein Fintech-Startup mit dem Anspruch auftritt, eine Bank zu ersetzen, dann wird es um eine Vollbanklizenz nicht herum kommen.
Dies gilt um so mehr, je abhängiger die neuen Banken von den existierenden Bankinfrastrukturen und je ähnlicher ihre Kosten- und Erlösstrukturen (und damit ihre Geschäftsmodelle) denen der klassischen Banken sind. Sollte es jedoch Absicht des Fintech-Startups sein, nur bestimmte Bereiche des Bankgeschäfts anzubieten, die lediglich einer eingeschränkten Regulierung bedürfen, dann ist eine Vollbanklizenz zumindest nicht zwingend.
Ob eine Banklizenz Light, wie sie in der Schweiz diskutiert wird, die Lösung ist, bleibt abzuwarten. #Oder aber das Fintech-Startup verfügt über so viel Kapital und technologisches Know How, dass es in der Lage ist, eine eigene Infrastruktur zu betreiben, wie Ant Financials/Alibaba bei den Internet Payments. Ein weiteres Beispiel ist PayPal, wenn man jetzt PayPal und Ant Financials als Fintech-Startups betrachtet.
Schaut man sich die Zahl der Banken an, die in den letzten Jahrzehnten neu auf der Bühne erschienen sind und es geschafft haben, sich zu etablieren, fällt der Befund recht mager aus, wie auf diesem Blog vor einiger Zeit in Bankgründung als Mittel der Wahl?thematisiert wurde. Wirklich etabliert haben sich Direktbanken, Autobanken, Umweltbanken, Teilzahlungsbanken und neuerdings Whitelabel Banken; also eigentlich Spezialbanken oder Limited Purpose Banken. Reine Online-Banken haben es dagegen schwer, wie Chiwon Yom bereits im Jahr 2005 in Limited Purpose Banks: Their Specialties, Peformance, and Prospects feststellte:
Die Internet-Banken konnten zum damaligen Zeitpunkt die in sie gesetzten Erwartungen nicht erfüllen. Zwar verfügten sie auf den ersten Blick gegenüber den etablierten (Filial-)Banken über den Vorteil geringerer Alt-Lasten, jedoch konnten sie ihren technologischen Vorsprung nicht in einen ausreichenden Gewinn ummünzen. Zu groß war auch hier bereits der Kostenapparat, bestehend aus IT-Infrastruktur und Personal.
Die Erlöse aus Zinseinnahmen waren im Vergleich zu den anderen untersuchten Limited-Purpose-Banken gering, was ja auch so gewollt war, da die Internet-Banken mit hohen (Guthaben-) Zinsen, geringen Kredit-Zinsen und günstigen Konditionen warben. Auch die Einnahmen aus Provisionen, Gebühren und Service-Leistungen konnten hier für keinen Ausgleich sorgen. Erschwerend kamen die hohen Kosten der Internet-Banken für die eigene Finanzierung hinzu. Weiterhin schlugen die im Vergleich zu anderen Banken deutlich höheren Kosten für Werbung und Marketing zu Buche (Eigenzitat).
Source: http://bankstil.blogspot.com/2016/06/benotigt-ein-fintech-startup-uber-kurz.html
The post Benötigt ein Fintech-Startup über kurz oder lang eine Vollbanklizenz? appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
#Network #virtualization specialist #Midokura today announced it has raised a $ 20 million #Series B #round with participation from Japanese #fintech company Simplex and existing investors like Allen Miner and the Innovation Network Corporation of Japan. With this round, Midokura’s total funding has now hit $ 44 million. As enterprises move away from expensive proprietary networking hardware… Read More
The 4 #fintech #events in #Europe below that you should not miss will celebrate the innovation and disruption in finance. All areas of financial innovation are showcased and the hottest and most innovative & disruptive startups and companies in the area will present. International and national experts share insights and experiences. Find your next great experience in fintech #this #June & #July
#Blockchain Amsterdam 2016
June 9th, Amsterdam
We’re in the early stages of a mass transformation in industry, the third phase of the information age. The first phase saw the introduction of computers, in the second phase they became interconnected and gave rise to the digital economy. The third phase is now among us. Computers and digital #technology are now ubiquitous, we have more data than we know what to do with and we’re redefining sectors that seemed untouchable for decades.
We are in the age of realignment and that’s where we find Blockchain technology. A distributed ledger, born from clever mathematics and a desire to transact anonymously while maintaining trust on both sides of the exchange. The world is starting to wake up to the vast number applications for such technology. The internet changed the world in 20 years. Blockchain will do it in 10. Welcome to year one. Welcome to Blockchain Amsterdam.
>> Sign up now with code FTSW to get 20% discount!
FinCoder 2016
June 20th, London, UK
The organisers of London Fintech Week bring you the 2nd Annual Fincoder, a conference tailored especially for Fintech technologist, developers and coders. Fintech developers are changing the face of the financial services industry. Hear from some of the brightest developers and technical leads from large financial services firms and fast-growing start-ups. Learn what it takes to work with large financial services firms and what investors look for in emerging financial technology. Discover new opportunities, ways to tackle challenges and the latest trends in financial services technology. From enterprise to start-up and everything in between, 140 attendee will join together at Aviva’s Digital Garage in Hoxton on June 20th 2016. This event is part of London Tech Week.
June 28th, Zurich, Switzerland
Money-Tech features 20 international digital payment and finance technology company pitches and offers 1on1 meetings.
Innovations presented will include digital currencies, mobile banking, peer-to-peer financing (crowdlending, crowdfunding), crypto finance, new trends insurance tech, #robo advisors, among many others.
Speakers will include academics and executives from fintech startups and financial services firm including Roland Berger, Ascribe, the Ethereum Foundation, Nexussquared, Wikifolio, Crowdhouse and more.
>> Sign up now with code fintech16 to get 15% discount!
London Fintech Week 2016
July 15th-22nd, London, UK
Fintech Week is a series of conferences, workshops, hackathons, meetups and parties. Each day we focus on a different topic. We always ensure that there is plenty of time for networking and meeting other innovators. In 2014, we successfully organised London’s first Fintech Week. In 2015 we scaled up and attracted delegates from across the globe, got some of the brightest minds in financial services on our stage and ran a Blockchain Hackathon in Canary Wharf.
The main conference/exhibition takes place at the Grange Tower Bridge Hotel, but other events take place across the City of London, Canary Wharf and “Tech City.” In 2016 we’re going bigger.
Fintech Week 2016 aims to unite the world of Fintech in the world’s financial capital – London of UK. Series of events will help to enhance the dialog between established multi-nationals, innovation firms, disruptive start-ups, governments, media and investors. You will be inspired, learn something, meet new clients, partners, developers, investors and find value for your business.
>> Sign up now with code FTSW to get 15% discount! Limited offer.
The post 4 Notable Fintech Events in Europe this June &038; July appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Russia’s National Settlement Depository discusses why it #believes the biggest #blockchain opportunities have yet to be uncovered.
fintech techcrunch
Do you operate a #startup that is tackling the financial services industry? Is your startup looking to disrupt the finance and banking sector? Are you looking to connect with the industry’s key players, decision makers and investors, and grow your venture to the next level?
Well, you may want to consider attending these seven #upcoming #fintech startup #pitch #competitions in #Europe and get the boost you need to grow your business:
June 20, 2016, in Zurich
Startupbootcamp Fintech is an accelerator program operating around the world. Its Startupbootcamp FastTracks are informal events that are used as part of the screening process aimed at selecting the top 10 cutting edge fintech startups that will get the chance to present their ventures and eventually get the opportunity to apply for the three-month accelerator program in London.
Startupbootcamp Fintech is looking for startups all areas of fintech including payments, cryptocurrencies, financial inclusion, asset management, capital markets, peer-to-peer, platforms, security and authentication, insurance, and lending.
The EIT Digital Challenge is aimed at fast-growing European #technology startups that are offering digital tech applied to industry, cities, wellbeing, infrastructure and finance.
The 15 most innovative European startups in these fields will be selected to compete to win up to €50,000 in cash, access to EIT Digital’s pan-European innovation network, as well as the chance to join the EIT Digital Accelerator for a full year, and eventually get support to find international customers and raise Series A financing to scale up.
The submission phase is open until July 15, 2016.
September 06, 2016, in Cologne, Germany
In its sixth year, the Pirate Summit is one of Europe’s biggest invitation-only gatherings of early-stage startups and investors. The Pirate Summit aims at celebrating entrepreneurship by being a platform where founders, investors and entrepreneurs can meet and connect.
This year, the event will take place at Odonien, in Cologne and is expected to bring some 1,200 participants.
The Pirate Summit will also be organizing a startup competition. The selected startups will receive two free-tickets to the Pirate Summit for the founding team members and a guaranteed pitching slot at the semi-finals of the “Walk the Plank” pitch competition at the first day of the Pirate Summit.
October 08, 2016, in Zurich
Swiss Startup Invest and Swiss Start Up Factory will be running the Elevator Pitch competition on October 08, 2016. The best candidates will get the change to pitch their businesses during the Swiss Startup Day event on October 25, 2016.
Registration opens on August 01, 2016, and will run until September 20, 2016.
The BBVA Open Talent Competition is back with its 8th edition aimed at providing support to and collaborating with promising startups tackling financial technology and other projects affecting the industry such as Big Data, cybersecurity, and APIs.
The winners will receive €30.000 each in cash prize, enjoy a two-week program in Mexico City and Madrid, and get the opportunity to get to know and engage with the entrepreneurial ecosystem and BBVA executives with the goal of making their business grow.
Participants need to register their projects before June 27, 2016 to get a chance to be one of the finalists in Europe, Latin America and USA, and the rest of the world.
Under the banner IN3 (Innovation-Investment-International), Global Expansion Summit offers a series of events, workshops and networking opportunities to facilitate the creation of innovation hot spots in new markets around the world, allow for startups, governments and corporates to connect, foster corporate and government innovation and digital transformation, and promote collaboration between innovation hubs across the world.
This year, Global Expanson Summit will run three startup competitions during its annual event on October 17 and 18, 2016, in London:
As a visitor you can register for the the whole event with Code &8220;FINTECHNEWS&8221; and get 20% discount.
October 17, 2016
14:15 – 15:30
Start Me Up Abroad is aimed at early stage startups looking to kickstart their business abroad. This is a dedicated platform for pre-funding startups to pitch to a panel of investors and accelerators from some of the most sought after startup city hubs and then take 5 minutes’ worth of questions from the panel.
October 17, 2016
16:00 – 17:15
The Bakery Live will focus on providing a new way to get innovation done with a low cost and low risk model. A large corporate brand will present a brief/challenge facing their business. The Bakery will select six startups from a large number of applications for the brief. These six startups then have three minutes to pitch their idea to the corporate client. The two finalists will be brought back for a final round and deeper Q&A. The corporate client speaker will choose the winner for a trial with the help of the audience.
Featured image: A businessman on a track ready to run by Stokkete, via Shutterstock.com.
The post 7 Upcoming Fintech Startup Pitch Competitions in Europe appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
Crowdfunding is real. Whether it is equity or debt platforms, the trend is very much alive with regional variations and adapting regulations. A real #global market opportunity The simple explanation is “Capital continues searching for investment opportunities, as deposit rates remain low” & &8220;Companies continue searching for funding as &8220;normal&8221; capital market functions have been…Read more #KoreConx: a global re-bundling #Fintech #case
Bank Innovation
[Transcript of Keynote given at FinnovAsia on May 30th 2016]
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Since the 2007 financial crisis, we have witnessed a series of scandals ranging from PPI mis-selling to the LIBOR rigging scandal. The direct consequences of this has been the implementation of a more stringent regulatory regime increasing overall compliances costs. Indeed, since 2007, financial fines have increased 45-fold, incurring additional compliance costs of multiple billions of dollars. Indirectly, the financial instability that is being generated impacts the population with most recent reports estimating that cancer mortality has increased by 500’000 and 50%+ of Americans cannot afford an unexpected expense of US$400.
In my opinion, Regulatory #Technology (#RegTech) represents a dual opportunity. Economically, it resolves compliance cost concerns of CEOs, whilst socially it delivers a direct add-value to regulators to enhance market stability and consumer protection.
In other words, while in advanced economies early #FinTech developments (e.g. P2P lending) appear to be a re-action to the symptoms of the previous financial crisis (e.g. credit shortage), RegTech appears as a more mature approach that may limit the severity of the next crisis.
Similarly to FinTech, the benefits of automatizing reporting and compliance processes are not new, as demonstrated by the introduction of pattern analysis or the work done by the SEC in the US in 2000. Furthermore, most of the post-crisis reforms focus on data transparency (e.g. Central OTC clearing), openness (e.g. PSD2) and standardization (e.g. unique entity identifier) However, whilst not new RegTech as a term has increasingly been used in the last 6 months. This uptick of activity warrants the necessity to start re-conceptualizing RegTech and set a foundation of understanding across the industry, regulators and policy makers.
Establishing a topology of the sector, RegTech covers four key areas:
As it currently stands, the most visible RegTech innovation seems to be in the e-KYC space, similarly to how payments and alternative lending used to define the bulk of FinTech innovation. The pain points encountered by #banks given their current AML/KYC process and relative simplicity of developing a certified third party authentication platform (versus implementing a wide scale use of smart contracts to identify contractual liability of a firm in real time) explains the immediate focus given to this specific sub-sector. However, the digital AML/KYC process represents a superficial (i.e. customer-facing) use of RegTech similarly to how certain digital banking propositions are simply a better UX skin on top of an outdated core banking engine.
In my mind the real long term value (both from an investment and social perspective) is embodied in solutions that redefine the way #regulation is being created so that risk identification and compliance can leverage on data and automation to really be proportionate (e.g. to actual risk) and real time (e.g. as opposed to batch reporting). In that respect, the development of Regulatory Sandboxes represents an initial step for regulators to deploy and learn how to use RegTech as part of their regulatory toolkit.
In that regard, the FCA (in the UK) has, once again, championed the promotion of this objective with the announcement of a “regulatory sandbox” in Nov 2015 (e.g. currently accepting applications and will go live with 10 participants in September 2016). This approach has so far been positively echoed in other jurisdictions with ASIC in Australia and MAS in Singapore holding consultations. The benefits of sandboxes are diverse. For external stake holders (e.g. start-ups), they reduce time to market and compliance costs. For internal stakeholders (e.g. regulators) they add an interaction method with start-ups as well as a transition tool towards a more data-driven supervisory model.
However, these developments are currently very much in experimental phase. The fact that access to the sandbox is limited to a handful of participants and the scope of experimentation constrained by EU laws (e.g. exclusion of credit institutions, insurance or alternative fund managers as well as base line regulatory capital for some activities irrespective of portfolio/market size) shows that only specific FinTech start-ups will benefit. The counter to that being considered, given the current Brexit discussion. Was Brexit to materialize, the FinTech eco-system in the UK (heavily driven my EU regulatory requirements) would lose its appeal (and VC funding in EU is already down 40%+ in Q1), making the rationale of a sandbox a moot point. In other words, a Brexit would leave the sandbox with not enough kids to play inside!
I therefore see the current sandboxes (e.g. virtual, umbrella, regulatory) as the first building block towards a reconceptualized regulatory regime that is truly real-time and proportionate. This means that the parameters of the sandbox also need to be conceived with an end objective in mind and leverage a true opportunity to change the current paradigm of market supervision/regulation and firms’ compliance and reporting processes. An illustration of this shift would be as follows:
This is very much an ongoing conversation and a very rare occasion where the interest of FinTech, FinServ and Regulators fell easily aligned.
[linkedinbadge URL=”https://www.linkedin.com/in/jbarberis”off” mode=”icon” liname=”Janos Barberis”] is Millennial in FinTech | HKU Law | Founder FinTech HK & SuperCharger | Co-Editor The FinTech Book
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