Big Dogs waiting to Eat Small puppies!


FinTech start-ups  are coming up with new mobile-first services – payments, loans, peer to peer lending, money transfers, digital currencies – and threatening to steal customers, particularly younger ones from the clutches of Big 5 Banks. From Google’s elimination of Yellow pages & Amazon’s transformation of the retail sector, to Uber‘s revolution in personal transportation & AirBnB’s hijacking of hotel clients, banks are taking heed of what is happening in other industries. Canadian Banks are notoriously falling behind on technology. Layers and layers of IT have built up over the years, gradually hobbling banks’ ability to innovate and respond to this new world. Very often banking groups that have grown by acquisition have never fully integrated their systems. When a bank reaches a certain size it becomes too risky to change the core technology, so they build layers on top, adding to complexity. Sameet Gupte, CEO of leading FinTech consultancy Virtusa, likens the IT challenge big banks face to refitting an aeroplane while it’s in the air!

Here are top 5 FinTech news stories from around the world to put things in perspective:

  1. Global banking giant Barclays is working with Peach payments and developing a secret tech solution to make it easier for consumers to make payments online. Some banks, such as Santander, National Bank of Australia and Citigroup, are providing venture funding and seed investments for fintechs.
  2. Nigerian firm Aella Credit, which has built an instant loan approval and payment platform that relies on data analytics to identify creditworthy borrowers has been working with Barclays for a while now.
  3. French bank BNP Paribas has linked up with Swiss fintech accelerator, Fusion – a FinTech company based in Geneva, it takes on 10 start-ups each year, and puts them through a 12-month intensive programme of mentoring, funding, and access to markets.
  4. Money transfer services like WorldRemitAzimo and TransferWise are using the latest technology to reduce the costs of sending money abroad, nibbling away at a traditionally lucrative business that banks used to subsidise less profitable parts, such as retail banking.
  5. Perhaps the biggest threat to banks, in Europe at least, is the European Commission’s forthcoming Payment Services Directive 2, due to come into force early in 2018. This aims to open up electronic payments to more competition by forcing banks to open up their IT systems to new entrants, thus encouraging innovation.

The impact of FinTech on big banking is very real. According to Investment bank Goldman Sachs, $4.7tn (£3.3tn; €4.1tn) in revenue for traditional financial services is at risk of being displaced by these fintech upstarts.

At the same time, for many young FinTech startups the allure of teaming up with these 800 pound gorillas is alluring but watch out – According to a recent research report by BBC: “if you partner with banks too early on, they can basically poison the well for you – you effectively become a consultant. They take the air out of the innovation balloon and the project dies instantly”.

As I always say “It’s a Marathon not a Race” so hold your horses, be patient and build it for the long haul.

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