Why change is needed
To develop Hong Kong, a leading financial centre to best serve regional and global consumers living in a digital age. The forum brought together professionals and executives, entrepreneurs and policy makers to look at advances in FinTech. As a contributor to the report, Grow Advisors was invited to participate and here we share some of the comments and discussions.
KPMG FinTech report (pdf 3.97MB)
73% of millennials imagine buying financial services through internet giants such as Google, Facebook and Apple. That's because 49% believe innovation in finance will come from those currently outside the industry. (KPMG)
Startups. And banks who want to be startups. The industry acknowledges being slow to change and their many bundled services make change difficult.
In competitor reviews, traditional banks are now benchmarking against Apple, Google and Facebook, as well as other banks.
Drivers of change
Thomson Reuters, a global leader in financial information and data services, sees a perfect storm that will shape capital markets, driven by 3 main factors.
Community - Previously, it was single individuals and organisations. Now, technology is allowing communities, networks, and groups to work together. In capital markets, the growth of crowdfunding solutions is all but certain.
Content - It used to be all about presenting data, the more the better. Today, clients demand more - they require insight, analysis and intelligence. Startups focusing on analytics and making sense of the vast information available are emerging and will be great demand.
Cost - While there are detractors, many believe cloud based solutions will underpin many changes. Service models where fixed costs are reduced by eliminating outdated infrastructure will make way for platform as a service models, with variable costs and less ownership costs.
Innovation isn't rocket science
Today's organisations are looking at innovation at three broad levels.
Moonshot: wild ideas which can significantly change consumer behaviour.
Improvement: taking something that's been done but making it better, cheaper, faster...
Everyday change: hundreds of small changes across across an organisation.
Ultimately, it comes down to being nimble, responding to change and effectively using the growing amount of available data. Regardless of scale, incorporating FinTech requires a change of culture too, one that embraces innovation and change.
Innovation without execution is just ideation
... But it can be
New services using AI and NLP in financial services are emerging. Business models have been developed that are able to predict and propose actions based on past experiences. It's the ability to detect and analyse a handful of significant actions when looking across millions of similar actions. FinGenius, a UK based startup has developed a virtual assistant similar to Siri, for financial services. For example, it is able to answer questions such as "How much did I spend on my car last year?" This requires more insight than merely adding up the gasoline bills and offers convenience and speed to internet connected consumers.
BBVA, a leading European bank and recognised as a leader in FinTech recently presented this summary of the major disruptors in financial services.
Some final thoughts
It was said of the China context, that if you have the data, you can build whatever business model you want. That seems to be the case with Alibaba, whose businesses span many areas, including financial services. From very recent beginnings, its destined to become a world leader in many financial services. Not bad for a company known as an e-commerce B2B platform. It's success is partly attributed to its success in converting huge amounts of data into service offerings and mobile solutions.
You cannot unlearn an experience. Competitors will be forced to deliver comparable services
Grow Advisors has advised startups and established companies in areas of FinTech, especially in the areas of online marketplaces, capital markets and startup ecosystems. Contact us to find out how we can enable innovation in your company.
Grow Advisors offers consulting and professional services on crowdfunding, crowd investing and p2p finance globally. Our advisors develop platforms that connect startup ecosystems, set up marketplaces and co-investment models, structured investment instruments, and find innovative ways to create finance solutions globally.