Fintechs can help incumbents, not just disrupt them
While true for other financial services, it’s most striking in corporate and investment banking.
McKinsey Insights & Publications
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Women Take Center Stage As Fintechs Eye Untapped Opportunity in Online Wealth Management
#Fintech ventures have long been praised for providing products that suit consumers’ changing behavior and expectations, but also for providing financial services to demographics that have been so far excluded.
Whether it is for rural populations in developing countries or SMEs struggling to get a business loan, #fintechs are smart in the way they target specific niches and markets, focusing on one product range, optimizing processes and leveraging #technology and digital platforms to cut costs, and thus, prices.
One demographic that has become more and more appealing to entrepreneurs is #women. This is mainly because women clients are finding that financial institutions are not meeting their specific needs. A Boston Consulting Group survey found that of all the industries that affect their daily lives, women feel most dissatisfied with the financial services industry, and this, on both product and service levels.
Image credit: Juan Nel via Shutterstock.com
Investing in particular is an area where women substantially differ from men. Studies have found that women are more conservative when it comes to investing and more insecure regarding their ability to invest. Other researches have suggested that women are actually better investors than men, preferring a more long-term approach, trading less frequently and sticking with their asset allocations.
As automated investment services – so called #robo-advisors &8211;, continue to expand into niche offerings, #online financial advice and portfolio #management is becoming more accessible to a broader variety of investors, including women.
Miss Kaya will be Southeast Asia&8217;s very first woman-focused robo-advisor. Founder Gina Heng, who simultaneously serves as CEO and co-founder at Marvelstone Group, has worked as a venture partner at Yozma Ventures, and co-founded asset management firm One Asia Investment Partners and Leonie Hill Capital in Singapore.
In a recent interview with the Singapore Business Review, Heng explained what pushed her to launch this particular venture.
“The types of online based #wealth management services in Asia today are still limited to financial education and product comparisons,” Heng said.
&8220;We want to bring a new wave of innovation by providing a robust, automated, algorithm-powered, wealth management platform. Miss Kaya, by being the first women-driven robo-advisory platform in Asia that caters to their very needs, serves to empower them to achieve longer-term financial goals and allow them to pursue their dreams.&8221;
Gina Heng, Miss Kaya
The company plans to pre-launch its website some time this month, starting with offering financial education materials and a beta version of its personal portfolio management services. Later, it will offer full financial advisory services for women to manage their own finances, Heng said.
Miss Kaya follows the likes of Ellevest, Worth Financial Management (WorthFM), SheCapital and Women Investor Now (WIN), which are all offering woman-centric financial services.
Sallie Krawcheck, Founder of Ellevest, at TechCrunch&8217;s Disrupt NY 2016, via https://techcrunch.com/
Ellevest, which launched in May, was founded by former Citigroup CFO Sallie Krawcheck and works much like more-established players such as Betterment and Wealthfront. Ellevest creates financial portfolios made of exchange-traded funds based on a user&8217;s timeline and risk tolerance. It also offers investment products such as Roth IRAs, traditional IRAs and investment accounts, and makes money by charging users a fee as a percentage of assets managed.
Ellevest takes into account female professionals&8217; unique needs such as the fact that women live longer than men and the fact that they tend to earn less than men.
Ellevest raised US$ 10 million in a funding round led by Morningstar in September 2015.
WorthFM, a digital investing platform by DailyWorth, was designed to engage and educate women as their investments grow. Launched in private beta in March, the platform builds one&8217;s portfolio by taking into account the client&8217;s personality, strengths, fears and sabotage patterns.
SheCapital, which launched in 2015, targets female investors and aims at closing the gender gap in financial advice. The platform was designed to act as a one-stop shop for women who are looking to invest.
Similarly, WIN aims at acting as an all-in-one platform integrating financial planning, investing, real-time money management tools, Robo and custom investment portfolio management, and curated content.
For Switzerland we haven&8217;t yet spoted a similiar Fintech Startup.
Featured image by Andresr via Shutterstock.com.
The post Women Take Center Stage As Fintechs Eye Untapped Opportunity in Online Wealth Management appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Sentiment Fintechs in the US
Last week we reviewed the #Fintechs using #Sentiment analytics, in Europe and the East. We opened up the topic further, asking the #Fintech Genome community to share their knowledge on the differentiating factors of each of these Fintechs, their business models and their partnerships. Join the Fintech crowd-sourced and curated process here. Sentiment analytics, whether…Read more Sentiment Fintechs in the US
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Wrap of Week #27: Swiss Fintech conference, Sentiment Fintechs, Open Data in banking, InsurTech Winners, Blockchain pitchathon
We started the #week with the main takeaways from the Swiss International finance forum&160;after hearing from UBS, Blackrock, FINMA and Ian Goldin. We initiated a landscape report of #Fintechs using&160;#sentiment analysis in the East and Europe. The US will follow next week. The&160;#Open #Data issue is really a double edge sword, especially for #banks. Some thoughts…Read more #Wrap of Week #27:&160;Swiss #Fintech #conference, Sentiment Fintechs, Open Data in #banking, #InsurTech #Winners, #Blockchain&160;#pitchathon
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Swisscom Announces 10 (Fintech) Finalists of StartUp Challenge 2016; 4 of them are Fintechs
#Swisscom has announced the ten startups selected to pitch on August 16, #2016 as part of its #StartUp #Challenge 2016.
Each year, the Swisscom StartUp Challenge, a business accelerator program organized in cooperation with venturelab, rewards five startups that are trying to get their ideas off the ground. These startups get a trip to Silicon Valley for a tailor-made acceleration program, mentoring with Swisscom Venture, investors and business angels, and get evaluated for an investment by Swisscom Ventures.
The ten startups, selected among over 200 applications from ventures tackling IT and telecommunication, #fintech, e-commerce, adtech, big data, Internet of Things, among many other areas, will have to prove themselves in August during a pitch day at the campus of the Ecole Polytechnique Federale de Lausanne.
The five best startups will be selected out of the ten teams and will fly to Silicon Valley in September/October 2016 to continue their journey in the program.
Previous winners of the Swisscom StartUp Challenge include Monetas, CashSentinel, among many others.
This year’s ten selected startups are:
Advanon (Fintech)
Launched by three former Google employees, Advanon allows SMEs to prefinance their outstanding invoices easily, quickly and transparently.
Based in Zurich, Advanon is the leading invoice financing platform in Switzerland.
Lykke (Fintech)
Lykke is building a global marketplace for all asset classes and instruments. Powered by #blockchain #technology, the online marketplace offers immediate settlement of transactions and much lower transaction costs.
Qumram (Fintech)
Qumram provides a solution that allows for every digital interaction (web, social and mobile) to be recorded, providing a digital audit trail for financial services organizations.
Qumram has created a single source of truth, recording indisputable proof of every keystroke, button click or mouse movement.
Xorlab
Xorlab is a cybersecurity company that develops and provides dynamic IT security products and services for businesses.
Xorlab has developed software for the early detection and prevention of client-side attacks, including spear phishing and drive-by infections.
Qipp (Fintech?)
Qipp is a web application that enables property managers and owners to bundle digital services and enhance the relationships between owners, managers and tenants.
The app allows for interaction between all involved parties, allowing for efficiency, value-added services, smart services and community-oriented micro-apps.
Xsensio
Xsensio has developed a wearable that uses biochemical information on the surface of our skin to provide real-time information about our state of health and well-being.
Xsensio is based on nanotechnology that exploits information from proteins, molecules and electrolytes on the skin surface.
Biowatch (Fintech)
Biowatch has developed a vein reading biometric wristwatch that recognizes its wearer from the pattern of their veins and therefore provides clear, secure authentication.
Through bluetooth and NFC, the watch enables users to make online payments, unlock their car, automatically log into their accounts or access buildings.
CatchEye
CatchEye has developed a video conferencing add-on that enhances video chat picture quality on Skype, Hangouts, Vidyo, Zoom and others, and enables participants to make eye contact. CatchEye works with Intel RealSense 3D camera.
Fashwell
Fashwell is a fashion-tech startup that has developed an app that allows users to find and buy fashion products online thanks to an image analysis algorithm based on machine learning. The app identifies fashion items and provides a dynamic linking of these items to online shops.
Fashwell has already raised over US$ 1 million in equity funding.
Nanolive
Nanolive is a new type of technology that enables scientists to conduct 3D microscope-based exploration of living cells without damaging #them.
The 3D Cell Explorer is a high-speed, high resolution and non-invasive tool that can look deep inside biological systems.
Featured image via Swisscom.ch.
The post Swisscom Announces 10 (Fintech) Finalists of StartUp Challenge 2016; 4 of them are Fintechs appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Fintechs Gain Significant Traction Notably in Emerging Markets
63% of customers across the globe are using #fintech products or services, according to Capgemini and Efma. Most particularly, penetration is the highest in #emerging #markets and among millennial population, but is also expected to increase in all geographies and ages, the firms claim in a report.
The report, which draws on one of the industry’s largest customer surveys with responses from over 16,000 customers across 32 countries and 140 industry executives, found that fintech ventures are increasingly attracting referrals, new customers, and gaining trust.
Users claim that fintech ventures are providing products that are easy to use (82%), services that are faster (81%), and an overall good customer experience (80%).
Customers said they would rather recommend fintech providers (55%) to their friends and relatives, rather than their own bank (38%). Only 15.9% of customers said they are likely to purchase another product from their bank, “pointing to the need for more innovative product development,” the report says.
In reply to the increasing competition, #banks in more than 85% of countries have improved customer experience. That said, younger generations remain the most unsatisfied, raising concerns about the ability of traditional banks to meet the higher expectations of these segment.
While over 90% of banking executives believe that change is accelerating towards digital banking, only 12.9% say they have the systems in place to support the change.
&8220;Banks are underestimating the value fintech firms provide in delivering a good experience and efficient service, as well as their potential influence on all areas of banking,&8221; the report says.
Findings suggest that banks are struggling to respond to &8220;increasingly aggressive fintech competitors.&8221; 65.3% of banking executives said they view fintech firms as partners and pointed out that the most appropriate ways to partner with these ventures are through collaboration (45.5%) and investment (43.6%).
&8220;Banks and fintech firms will need to work together and leverage each other&8217;s strengths to create the best possible future ecosystem,&8221; the report advises. &8220;By being proactive, banks can reduce the risk of being marginalized as the ecosystem evolves.&8221;
The report argues that APIs are essential to the future of banking as they offer the ability to take advantages of fintech assets such as speed and creativity. While some have embraces the open architecture of APIs, the industry as a whole still has a long way to go.
Additionally, regulation such as the EU&8217;s Directive on Payment Services 2 (PSD2), which aims at establishing the legal foundation for the creation of an EU-wide single market for payments, will further pressure banks to expose banking core ledgers openly and transparently to third-party solution providers.
&8220;Today&8217;s partnerships are a stepping-stone toward a much bigger role banks are expected to play in creating a digital banking ecosystem. In the emerging ecosystem, existing bank infrastructures and new fintech #technology will both play strong parts,&8221; the report claims.
By teaming up with fintech ventures, banks can be &8220;better equipped to meet rising customer expectations for enhanced experiences and innovative services,&8221; it states.
&8220;They can explore ways of generating revenue from #fintechs that want to tap their expertise in traditional banking areas like risk management and payments. Putting a price on assets like geo-enhanced data, customer authentications and money transfers could held banks generate new revenue streams.&8221;
Capgemini and Efma&8217;s ‘World Retail Banking Report 2016&8216; echoes previous papers released that advise for more collaboration between the banking and the fintech sectors.
The Economist Intelligence Unit issued a report in December last year, arguing that banks and fintech startups have more business interests in common than issues that divide them.
Another document, by Deutsche Bank, claims that banks and fintech ventures should collaborate rather than compete against each other.
Finally, in Accenture&8217;s &8216;Fintech and the evolving landscape&8217; report, the consultancy firm argues that banks should consider fintechs as enablers, urging them to assess, adapt and adopt new technologies.
The post Fintechs Gain Significant Traction Notably in Emerging Markets appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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London’s Fintechs: Top 10 Rising Stars
Although not as large as in the US, London has a burgeoning startup ecosystem that leads the European market. In the field of #fintech, though, London is the world’s number #one.
The UK, which employs some 61,000 people in the financial #technology sector, ranks ahead of other competitors. In 2015, fintech generated £6.6 billion (US$ 9.41 billion) in revenue, and accounted for 32% of all revenues generated across in-scope regions.
Image credit: Tower Bridge in London by Mapics, via Shutterstock.com
In a report commissioned by the UK&8217;s HM Treasury released earlier this year, EY argues that the UK&8217;s strong fintech ecosystem could be in part explained by its world-leading fintech policy environment. This prosperous environment includes supportive regulatory initiatives, tax incentives, and government programs designed to promote competition and innovation.
London in particular has a number of very successful fintech startups which grew on to become unicorns. These billion-dollar ventures include Skrill, the popular e-commerce business providing online payments and money transfers services; Wonga, a payday loan company offering “short-term, high-cost credit;” TransferWise, a peer-to-peer money transfer service; Funding Circle, a peer-to-peer lending marketplace; and Markit Group, which provides independent data, trade processing of derivatives, foreign exchange and loans, customized technology platforms and managed services.
Powa Technologies, once valued at US$ 2.7 billion, collapsed into administration in February this year after blowing through more than US$ 200 million of investors&8217; money. Powa Technologies, which provides mobile commerce and e-commerce services, was struggling to sign clients, struggling with management dysfunction and a demoralized workshop, according to a report by Business Insider.
Powa, which appointed Deloitte as administrators following its failure, was eventually broken up and two of its units, namely PowaWeb and PowaTag, were sold to separate groups of investors.
Like anywhere else, there are winners and losers, but today, we will focus on London&8217;s top 10 #rising #stars:
WorldRemit
Founded in 2009, WorldRemit offers much cheaper international money transfer services than traditional players and further allows users to send money to and from smartphones.WorldRemit has raised over US$ 145 million so far and was valued at US$ 500 million in a US$ 100 million funding round last year, according to the Financial Times.
RateSetter
RateSetter is a peer-to-peer lender that lets users lend their savings out to individual borrowers. The platform has lent over £1.2 billion (US$ 1.72 billion) since launching in 2009.RateSetter has raised over US$ 10 million in funding so far. The company is known for having introduced the concept of a &8220;provision fund&8221; into peer-to-peer lending and has recently announced plans to broaden its client list to include small and middle-sized enterprises.
Crowdcube
Founded in 2011, Crowdcube is an equity crowdfunding platform that lets companies raise money by selling shares online, and people to purchase equity in unlisted, UK-registered, businesses.The platform has helped 400 businesses raise over £160 million (US$ 228 million) from over 280,000 investors since it launched in 2011. Crowdcube has raised US$ 18.6 million in funding so far.
Zopa
Founded in 2005, Zopa is the world&8217;s oldest and Europe&8217;s largest peer-to-peer lending platform service that lets users lend money to others. Zopa, an award-winning loan provider, has lent over £1.53 billion (US$ 2.19 billion).Zopa is also a founding member of the Peer 2 Peer Finance Association industry group. The company has recently branched into the car loan refinance market and phone finance.
Zopa has raised over US$ 55 million in funding.
Seedrs
Seedrs is an equity crowdfunding platform for investing in startups and later-stage businesses throughout Europe. Founded in 2012, the platform lets users invest as little as £10 or €10 into the businesses.Seedrs has allowed £130 million to be invested in over 350 deals since the platform launched. In 2015 alone, 38,000 individual investments were made on Seedrs worth £64 million (US$ 91.5 million).
Seedrs has raised over US$ 21 million in funding so far.
iwoca
iwoca is an award-winning finance provider for small businesses in the UK, Poland, Spain and Germany. iwoca offers flexible credit, allowing businesses to get up to £100,000 in credit facility. The company is partnered with Alibaba to offer a trade finance product, e-Credit Line, to businesses purchasing from Chinese suppliers.iwoca has raised US$ 31 million in funding. The company was founded in 2011 by two ex-investment bankers from Goldman Sachs and Deutsche Bank.
Atom Bank
Atom Bank is what we call a &8220;neo-bank,&8221; a branchless, app-only bank. Founded in 2014, Atom Bank received its banking license in June 2015 and launched its app in April 2016.Atom Bank is backed by Spanish bank BBVA, Woodford Investment Management and Toscafund Asset, and has raised over US$ 196 million so far. Atom Bank is targeted at the millennial generation.
Currency Cloud
Currency Cloud provides &8220;cross-border payments as a service.&8221; The company&8217;s platform leverages the cloud to provide access to and optimize across a multitude of payment networks and exchange rate providers, and at cheaper costs. Currency Cloud&8217;s technology powers some of the industry&8217;s biggest names including WorldRemit and TransferWise.Founded in 2012, Currency Cloud has raised US$ 35 million in funding.
Tandem
Founded in 2014, Tandem is an app-only bank which made headlines earlier this year when it successfully raised £1 million (US$ 1.43 million) in its first crowdfunding round in just 15 minutes.Tandem, which has yet to launch, has already been granted a banking license and has been valued at £65 million (US$ 92.9 million), according to Business Insider.
SETL
Founded in 2015, SETL develops and provides #blockchain infrastructure for finance firms.SETL has launched earlier this month the OpenCSD, a blockchain powered platform that enables market participants to run permissioned registry service for payments, settlement and clearing of cash and other financial instruments.
If you are interested in learning more about London&8217;s fintech scene and emerging trends in digital finance, two events will take place in London in the coming months.
London Fintech Week, which will take place between July 15 and 22, 2016, will dive into the city&8217;s thriving fintech community. The week-long event will tackle anything from blockchain tech, payments technologies, to capital markets and insurtech.
Special Offer: Sign up now with code FTSW to get 15% discount for event registration!
Another event, the Global Expansion Summit, will cover the broader digital economy on October 17 and 18.
Special Offer: Sign up now with code FINTECHNEWS to get 20% discount for event registration!
Featured image: Millennium Bridge in London, by Songquan Deng, via Shutterstock.com.
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Fintechs Likely to Jeopardize One Third of German Banks Revenues, Says McKinsey
#Fintech could potentially #jeopardize around a #third of all #German #banks #revenues over the next few years, according to #McKinsey and Company.
In a new report, McKinsey explores how fintech is transforming Germany’s financial sector, offering new opportunities for both entrepreneurs and banks.“All the indications are that these #FinTechs will also gain an even stronger foothold on the German market over the next years. Customers are open to change as never before,” the report #says.
&8220;By 2020 almost half of all German bank customers will have opened a digital bank account. The share of mobile banking is increasing rapidly. FinTechs are strong in these areas. In the mid-term they can challenge but also partner with banks.&8221;
Successful fintech companies have a few things in common. Firstly, they are lean, agile and innovative. They require fewer but highly specialized staff, and hardly any physical infrastructure. Secondly, they focus on individual segments of the value chain and can often substantially undercut the fees charged by incumbents.
Two examples are Auxmoney, the startup that runs one of the largest marketplace lending platforms in Germany with over a million registered users. The company leverages Big Data for better credit scoring.
Another example is Number26, the startup behind Germany&8217;s the first digital bank that lets customers manage their finances from a smartphone. Users can open an account in just eight minutes thanks to real-time identification provided by IDnow.
The report points out that fintech companies have so far primarily targeted private customers, leaving German corporate customers as a substantial untapped opportunity.
&8220;The key reasons for the focus on private customers are the low barriers to entry and that less expert know-how is required for founding a fintech,&8221; it says.
&8220;Solutions for corporate customers are harder to realize. In the corporate arena it is not enough to be cheaper, more convenient and more user friendly. Fintechs also have to also be familiar with many nuances, invest more time in rather complex products, and build up specialist know-how for marketing them.&8221;
The report suggests that in Germany at the end of 2015, there were over 200 reasonably sizable fintechs, some sponsored by domestic incubators such as FinLab and FinLeap.
For banks, the growing competition with fintech companies represents a challenge which could potentially cost them between 29% to 35% of their revenues.
That said, if banks undertake digital transformation of their value chain, they could increase their returns.
&8220;The prime requirement is to keep an eagle eye on key pioneering developments,&8221; the report advises. &8220;Proactive market surveillance is essential.&8221;
It concludes:
&8220;The market is in constant upheaval – this applies to FinTechs and banks alike. Each player should investigate new technical opportunities and build its strategy on its own strengths. Customers in Germany are open to change as never before. Companies that have a compelling customer proposition with transparent products and superior service will continue to succeed in the future.&8221;
Get McKinsey and Company&8217;s full ‘Fintech – Challenges and Opportunities: How digitalization is transforming the financial sector&8217; report: http://www.mckinsey.com/industries/financial-services/our-insights/fintech-challenges-and-opportunities
Featured image by NicoElNino via Shutterstock.com.
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