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
- Open APIs are fast becoming the future of Financial World, not imagined 3 – 5 years back…
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
- Open up the API…
Nice infographics: It is laden with huge significance for the future..