Fundamentals of banking is dissolving and being replaced with the new fintech world now to 10 yrs ahead.
The seeds are being sown now through the last 3-4 yrs. mobile banking, millennials, ubiquitous internet, evolving technology for distributed, libertarian controls being the triggers.
Conventional technology and process is fast turning a liability in this new order.
In the year 2018 and ahead any banking technology company will find it tough to survive… as all the customers themselves will have a huge pressure on their profitability.
- Security considerations are a reaction to the new fintech challenges.. Tighten and push the barriers higher
- The millennials drive the change with less apprehension of risks in using alternate financial channels across mobile platform
- Lower n lower durations for innovation in products in the market in future
- Change in future can be driven from even just ease of use, minor margins, superficial payback et als.. with minimal guarantee of account security
- Banks / FIs will have to downsize considerably, invest in morphing tech space, to get similar margins as the innovators
- Aggregators, subscription based service, SaaS model will be key to margin reductions
Implications for Tech Firms:
- Be lot more agile, startup like in modules : Reduce cycle times for new ideas/ innovations for go-to market
- Take calculated risks in new product developments.. 90% can fail
- Identify the whitespaces and invest in even lower spectrum of the market in newer products independent of the main product line
- SMBs will be key to rolling out innovations not the traditional route from large FI downward
- Hype cycle identification is key to move forward aggressively
- P2P Lending is going to be viral and spread to SMBs
- Syndicated lending may be the most important area of expertise as all lending converges to syndication due to P2P lending
- Fintech innovations like blockchain can be core to syndicated or any form of lending, need to invest on it
- Innovate in faster processing / turn-around, lesser exception handling, reduce operations pressures / workarounds as implemented today for all lending products
- Higher demand for straight through processing
- More integrated front to back office origination
- Crowd Lending integrated with main syndicated platform
- Streamlined payments, billing in the servicing of Deals
- Crowd or networked trading platform
- Move from the niche segment of high value low volume product usage to high volume, straight through processing with multiple lenders and single borrower deals
- Blockchain based settlement process replacing the Markit and Clearpar or even depository services like DTCC or Intralinks. Or these services will adopt some of the new blockchain based new platform
Nice infographics: It is laden with huge significance for the future..