Digital technology has given financial service innovators tools that connect investors with those seeking funds. Constant improvements in user experience coupled with initiatives to create trust and security will provide future growth. Today, customers rely on mobile devices to manage their lives, and traditional financial service providers look to adapt or risk losing profit pools.
An additional threat relates to operational roles where antiquated technology and human resource skill gaps impact competitivity, and subsequent ability to generate new business in an online world
Consider the following online customer journey where each service delivered by a different provider:
- A digital marketing algorithm directs customers to a platform, based on search or online behaviour
- Onboarding software captures their personal details and performs KYC
- Anti-money laundering software forms part of the compliance and due diligence process
- A cloud based document depository, incorporating blockchain / distributed ledger technology
- An open API that presents the best deal flow from a variety of sources, targeted based on the user’s viewing habits and investment objectives
- Third party payment gateway, online custodian and e-wallet services allow online transactions to be carried out safely and securely
The collaborative approach allows each provider to focus.
Meanwhile, the platform operator focuses on business development and brand building, providing investment or funding opportunities
The emerging approach will change the development process for startups and established businesses alike. Together with lean startup principles, it is possible for innovation to happen faster and more efficiently.
The opportunity is for those providing traditional funding or investing services, to operate next generation online services in weeks rather than months and years.
Efforts to reduce the illegal movement of capital and anti-money laundering legislation has become much tighter around the world. The 2008 global financial crisis forced regulators to redouble efforts to protect investors from making inappropriate investment decisions. The FCA in the UK published guidelines for the use of social media including Twitter (#investoraware) and Facebook. The challenge for regulators is designing new rules governing material presented online through digital channels.
Additionally, regulators are developing 'regulatory light' approaches, termed sandboxes, that allow companies to develop and market test new services under controlled circumstances. The UK’s FCA, together with regulators in Singapore and Hong Kong have already launched new initiatives. Australia is expected to follow suit early next year.
Incorporating third party technology is not easy for established organisations. Notwithstanding the security and trust issues, there are a myriad of problems. Compatibility and legacy concerns create obstacles that in some cases jeopardise whole projects. There are ways to address these challenges, requiring buy in from the highest levels of the organisation and a forward thinking digital strategy.
The key for organizations in this space is how to embrace changing customer needs, design compelling services, and deliver using new innovation models based on collaboration. As the fintech ecosystem matures, Grow Advisors’ supports implementation through its global network of fintech providers.
Grow Advisors, UK & Ireland
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Grow Advisors is proud to support the transition to digital finance around the world. Our team offers consulting and professional services on online asset and wealth management solutions, lending and p2p, crowd investing and fund raising around the world. We are uniquely placed to cover both planning and executional aspects of all our ideas.