FinTech

The Future Of Banking: Fintech Or Techfin?

Contents

Topic in a Nutshell

1. Video: opportunities and risks with bigtechs entering the financial sector
2. Video: the opportunities of TechFin
3. Video: how bigtechs’ role in finance will evolve
4. Video: are bigtechs monopolies?
5. Infographic: how bigtechs make their billions
6. Video: are some bigtechs unstoppable?
7. Video: are bigtechs a threat to financial services?
8. Is Big Tech the Future of Banking?

Regional FinTech News

9. 3 ways financial institutions in Kazakhstan can interact with BigTechs
10. Ozon launches card for customers
11. Kazakhstan’s anti-monopoly committee investigating Google
12. Tinkoff-Yandex merger: benefits for both
13. Kazakhstan’s mobile finance future
14. The heads of Yandex, Tinkoff and Severstal discuss technological developments
15. How Sberbank is transforming from a bank into an online ecosystem
16. Sberbank to launch music streaming service?

More from the FinTech World

17. Libra: everything you need to know about Facebook’s cryptocurrency
18. Apple Card review
19. Video: the threat of payment apps to U.S. banks
20. G20 countries discuss new tax system for large internet companies
21. China’s WeChat: the high cost of digital convenience
22. BigTech’s impending banking invasion
23. Hong Kong facilitating BigTech’s push into banking
24. Amazon Pay launches Android P2P payments in India
25. BigTechs threaten financial stability
26. The race to digitize banking in the Asia-Pacific region
27. China’s TechFin giants

BFC Recommends

28. Opportunities for wealth managers in the growing gig economy
29. The rise of BigTechs in finance highlights important issues
30. The difference between FinTech and TechFin
31. 5 competitive strategies for facing the BigTech threat
32. BigTechs march to battle in the financial sector
33. BigTechs push into the asset management industry
34. 4 lessons financial institutions can learn from digital-centric companies
35. 12 lessons all industries can learn from BigTechs
36. EBAday 2019 panel: will BigTechs come to dominate instant payments?

Topic in a Nutshell

1. Video: opportunities and risks with bigtechs entering the financial sector

2019-08-05  

BIS economic adviser and head of research Hyun Song Shin discusses the entry of bigtech companies into the financial services industry and the new challenges this poses for financial regulators, consumer protection and data privacy. https://www.youtube.com/watch?v=ngbmhAazqLA

2. Video: the opportunities of TechFin

2019-08-05  

Chris Skinner, chairman of the Financial Services Club UK, discusses the opportunities of TechFin. https://www.youtube.com/watch?v=GiAhDk0IwKQ

3. Video: how bigtechs’ role in finance will evolve

2019-08-05  

Representatives from Business Insider, Dankse Bank, Erste Group Bank AG, Paypal, Frontier Economics and UniCredit Group discuss how bigtech companies’ roles in finance is likely to evolve in the coming years.  https://www.youtube.com/watch?v=o2gvi7C2n5A

4. Video: are bigtechs monopolies?

2019-08-05  

Bigtech companies are everywhere, but is their expansion putting them on a head-to-head course with antitrust legislation? https://www.youtube.com/watch?v=c5tFFXo3HFQ

5. Infographic: how bigtechs make their billions

2019-03-29   www.visualcapitalist.com

Collectively, the top 5 bigtech companies generate over USD 8 billion in revenue each year, more than the country of Saudi Arabia. But how do these companies make their money. This infographic digs in to show us.

6. Video: are some bigtechs unstoppable?

2019-08-05  

Amazon, Apple, Facebook, Google and Microsoft are five of the most valuable companies in the world, earning the monikers “The Big Five” and “The Frightful Five”. Take a quick look at how these companies have developed their huge market shares and whether or not it might be time to consider breaking them up. https://www.youtube.com/watch?v=3cuILtoQbZE

7. Video: are bigtechs a threat to financial services?

2019-08-05  

In this excerpt from a panel on mass automation, three CEOs discuss the impact of digital companies’ actions on the financial industry and what it means for traditional players. https://www.youtube.com/watch?v=I3tPD05TX6M

8. Is Big Tech the Future of Banking?

2019-08-05  

With a lower-than-ever-before barrier to entry, bigtechs are starting to see the financial sector as a highly-profitable way to expand their businesses and give consumers even more. In fact, there is evidence that bigtech Amazon is even considering offering a checking account service to consumers. This should be setting off alarm bells in traditional financial institutions as such a move could cost them up to USD 100 billion.  The fact is that consumers seem to trust bigtechs more than traditional financial institutions. For example, 65% of Amazon Prime customers said they would sign up for a bank account with Amazon, and 43% of non-Prime customers and 37% of non-Amazon customers said they would do the same. With bigtechs increasingly encroaching on their space, traditional financial institutions must act now if they are to remain relevant in the future. They must work to quickly adopt a data-driven and customer-centric mindset. This includes using their data to truly reach consumers and provide them with amazing experiences – all at the touch of a finger. They must work now to build and maintain meaningful relationships or risk being just another outdated company unable to keep up.

Regional FinTech News

9. 3 ways financial institutions in Kazakhstan can interact with BigTechs

2019-06-30   forbes.kz

New players, so-called BigTechs, are entering global financial markets and capturing new market niches by taking advantage of their technological innovations and huge customer bases. As these companies slowly begin their penetration into Kazakhstan, financial institutions in the country will need to choose one of three paths forward:

  • Competition – globally, this strategy is losing as financial institutions, even those demonstrating advanced technological growth, cannot keep up with the growth of BigTechs. The fact is that new digital competitors are able to develop and market new offers better and faster than financial institutions.
  • Partnership – partnerships with BigTechs allow financial institutions to develop new communication and sales channels as well as optimize operational efficiency and reduce marketing costs. Partnerships offer an interesting and important path forward for financial institutions to be able to survive and thrive.
  • Transformation – an alternative to partnerships is for financial institutions to completely transform and start offering non-banking services, moving from a “my money” strategy to a “my life” strategy. Such a move, however, requires colossal investments, making it a realistic option for only the largest financial institutions. Perhaps the best example of this is Russia’s Sberbank, which is working to create its own online ecosystem through smart partnerships and the development of unique non-banking solutions to life’s frustrations.

10. Ozon launches card for customers

2019-04-18   www.plusworld.ru

Internet company Ozon has announced the launch of its own card. The MasterCard World PayPass card serves as a payment instrument as well as gives users access to a loyalty program that includes cashback (in the form of points) for purchases made anywhere in the world. The card is linked with Ozon.Card Internet Bank, where users can pay for services, transfer money, replenish balances and view card statements. The card can also be linked to both Google Pay and Apple Pay. Ozon hopes that the card will increase purchases and help develop a closer relationship with clients through more personalized offers. 

11. Kazakhstan’s anti-monopoly committee investigating Google

2019-08-12   forbes.kz

Kazakhstan’s Ministry of Economy has announced the launch of an anti-monopoly investigation into Google. The announcement follows a number of complaints received after the internet giant began to block the ads of companies offering non-official repairs for equipment such as mobile phones and computers. All information is currently being studied in relation to the country’s current legislation on the protection of competition.

12. Tinkoff-Yandex merger: benefits for both

2019-07-15   www.vedomosti.ru

A proposed merger between Yandex and Tinkoff is being heralded by many as a move that will greatly benefit both sides. For Tinkoff, they will gain access to an expanded customer base, and Yandex will benefit from the ability to integrate credit and financial services into its vast digital ecosystem.  Currently, Yandex, the largest internet company in Russia, is in a partnership with Sberbank; however, there are reports that the partnership is not a happy one. It should be noted that there have been no known official talks of a merger between the two or how such a merger would work, but the most likely scenario is that Yandex would purchase part of Tinkoff’s stake in TCS Group. Should such a merger eventually happen, it will be interesting to see what Tinkoff, a relatively small bank with about 10 million customers, is able to do with access to the more-than 60 million Yandex users.

13. Kazakhstan’s mobile finance future

2019-03-15   kursiv.kz

Telecom companies and banks benefit from cooperation in the field of mobile finance, especially in regard to transfers and payments. In Kazakhstan, mobile finance is only at the beginning of its journey; however, there is enormous potential as mobile finance transactions amounted to KZT 65 billion last year.  Most of this was spent on transportation (i.e. users paying for the cost of public transport from mobile financial sources). This is expected to continue to grow in Kazakhstan, especially as the state pursues its Digital Kazakhstan program. Beyond this, the National Bank has also been working to introduce a system of easy payments and transfers using nothing more than a phone number. As mobile finance continues to develop in the country, it will be key for communication efforts to effectively promote these services and their ease-of-use.

14. The heads of Yandex, Tinkoff and Severstal discuss technological developments

2019-06-07   vc.ru

The St. Petersburg International Economic Forum hosted a discussion with the heads of Yandex, Tinkoff and Severstal, during which the three discussed ideas on the development of technologies. Highlights of the discussion are presented below, with more details available here.

  • Artificial intelligence – artificial intelligence will not change human functions, rather it will help optimize routine tasks and make life easier for workers. It’s basically a digital version of the steam engine in terms of its impact on workers.
  • Future professions – routine and intermediary professions are likely to be replaced by automated processes; however, there will also be a place for professions that create something new, especially if that something new is perceived as valuable to consumers.
  • Investment climate – the Russian investment climate is characterized by limited finance and a focus on sales, whereas in Western countries (especially the U.S.), there is a seemingly endless flow of finance and a focus on ideas.
  • The role of the state in private companies – the state should only act to restrain entrepreneurs from “flying into space, like Elon Musk”; other than that, entrepreneurs should be free to take advantage of the opportunities they see as being beneficial to consumers.
  • Digitization – digitization is nothing more than a buzzword that has become somewhat meaningless in and of itself. Everything is becoming digital; this is inevitable. The personnel to do it are what really matters.
  • Creating an entrepreneurial culture – the development of an entrepreneurial culture is highly-dependent on the state. States need to create an environment for business development as well as a desire to launch something new. In Russia, there must be continued reforms, including in education, that will foster an environment in which individual entrepreneurs can be more successful. 

15. How Sberbank is transforming from a bank into an online ecosystem

2019-07-25   vc.ru

Russia’s Sberbank has a plan to create a fully-functional online ecosystem that combines banking services and non-financial services by 2024. To do this, the bank has been spent more than RUB 60 billion on a number of efforts. These include working with established companies, buying out companies and creating their own online services from scratch. Here are a few highlights of what Sberbank has been working on:

  • Working with established companies
      • Yandex.Market – the two created a market place in 2018 that hopes to become Russia’s version of Amazon.
      • Rambler Group – Sberbank recently announced that it will buy 46.5% of the group’s online business, ultimately allowing the bank to integrate itself into a number of existing online services run by the group.
  • Ownership over/controlling interest in existing companies
      • Yandex.Money – in 2012, Sberbank acquired a 75% minus RUB 1 share of the payment system.
      • Work.ru – Sberbank purchased 100% of the site, which provides job search and staff recruitment services, in April 2019.
  • Own initiatives
    • DomKlik – DomKlik provides online advertisements for the sale of apartments.
    • Talk and Sbermobile – launched in 2017 as a pilot, the two services are virtual mobile operators that are based on Tele2 networks.
    • SberCloud – SberCloud offers users virtual data centers as well as the possibility to use artificial intelligence to solve certain tasks.

16. Sberbank to launch music streaming service?

2019-08-06   www.forbes.ru

Russian bank Sberbank is planning to launch a music streaming service in the near future. Currently, the bank is looking for a partner and is reportedly in negotiations with Yandex, Mail.ru and Zvooq. While representatives of all the aforementioned companies declined comment, Sberbank has reportedly been eyeing the streaming market for some time and plans on using streaming as part of its effort to build an online ecosystem. The ultimate success of such a service in a highly-competitive market will depend largely on how well the bank is able to execute a sound strategy that takes advantage of and further develops what users are familiar and comfortable with.   

More from the FinTech World

17. Libra: everything you need to know about Facebook’s cryptocurrency

2019-08-19  

Facebook has announced a plan to launch its own cryptocurrency (Libra) next year. In fact, what they may be doing in launching Libra is actually creating a new financial system that could replace traditional currencies in many emerging economies. Here’s everything you need to know about Libra. What is it Libra will be a stable coin, i.e. a cryptocurrency tied to a currency basket and low-risk securities. This should enable Libra to avoid the foreign exchange risks other cryptocurrencies encounter. Initially, Libra will be used for fund transfers via the WhatsApp and Messenger apps. Facebook also plans to launch a series of ATMs that will be able to sell the cryptocurrency in an offline manner. In time, Facebook expects that Libra will become a universal payment system. To this end, the social media giant has partnered with 28 international partners (including Mastercard, Visa, Vodafone, PayPal and Uber) to create a Geneva-based entity that will govern the new cryptocurrency.   How does it work Facebook has created Calibra, an independent subsidiary, to facilitate Libra-based transactions. Calibra will also offer users a digital wallet in which they can save, send and spend Libra currency. Links: Libra White Paper    Facebook plans to launch 'GlobalCoin' currency in 2020   Facebook's cryptocurrency ambitions face privacy concerns, political backlash    Authorities' responses The Bank for International Settlements (BIS) has stated that the launch of Libra could pose a number of risks to the international banking system and is likely to be met by a speedy response from policymakers around the world. The U.S. Congress has already stated that Facebook should delay Libra in order to give lawmakers and regulators time to investigate the ramifications of Libra on the stability of financial systems. Mark Carney, the governor of the Bank of England, has stated that Libra will most certainly be heavily-scrutinized by the U.K.’s central bank, which will work closely with other countries as well as the Bank of International Settlements, the International Monetary Fund and the Financial Stability Board. French Finance Minister Bruno Le Maire cautioned that Libra should not be seen as a replacement for traditional currencies and called on the Group of Seven (G7) to examine Libra in great detail. G7 representatives themselves have already spoken out, emphasizing that Libra raises serious concerns and must be regulated as tightly as possible in order to ensure that it does not upset the world’s financial system. On the other hand, European Central Bank board member Benoit Coeure was more optimistic, stating that “a global stable coin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs and support greater financial inclusion.” Links: Facebook's Libra cryptocurrency 'poses risks to global banking' Top Democrat calls for Facebook to halt cryptocurrency plans until Congress investigates  Bank of England Governor Says Facebook’s Libra Crypto Will Be Scrutinized  Facebook Token Runs Into Instant Political Opposition in Europe G7 urges tough Libra regulation, agrees to tax digital giants   Other responses Libra was the one of the main topics of discussion during London FinTech Week. The majority of participants there felt that such initiatives need strict regulations to govern them or there could be a risk to financial stability the world over. The Libra announcement has also forced the People’s Bank of China to step up its research into creating its own digital currency as Chinese officials believe that Libra could potentially pose a challenge to Chinese cross-border payments, monetary policy and even financial sovereignty. In a bid to compete with Libra, retail giant Walmart announced its application for a cryptocurrency patent. Walmart hopes to create a little-to-no fee place for users to store their funds, which can then be quickly and easily redeemed at selected retailers or partners. Links: Facebook’s Libra forcing China to step up plans for its own cryptocurrency, says central bank official  Walmart Is Trying to Patent Its Own ‘Libra’ Like Digital Currency   Critics Nobel prize-winning economist Joseph Stiglitz is highly-critical of Libra, citing concerns over how it could cause a boom to shadow economies: “the last thing we need is a new vehicle for nurturing illicit activities and laundering the proceeds, which another cryptocurrency will almost certainly turn out to be.” Weiss Ratings considers Libra to be akin to PayPal or Apple Pay: “the primary difference is that there's a new asset that would be issued, and it uses blockchain technology. And in the West, governments that mandate what kind of technology tech companies can or cannot use could be crossing some dangerous constitutional lines.” Facebook co-founder Chris Hughes cautions that Libra could shift monetary clout to private companies: “if global regulators don’t act now, it could very soon be too late,” while Lawrence Wintermeyer, chief executive of the non-profit organization Innovate Finance, believes Libra has no real chance of success due to the lack of consumer trust and confidence in Facebook, especially regarding privacy matters. Links: Thumbs Down to Facebook’s Cryptocurrency Gov’t attacks Facebook Libra; proves value of decentralization Facebook co-founder: Libra coin would shift power into the wrong hands   What it could mean Some believe that Libra could spur other tech giants to follow suit and develop their own cryptocurrencies, while others think that Facebook could eventually become the largest bank in the world, pushing out many banks and credit card companies. Links: After Facebook Libra, Should Other Tech Giants Develop Their Own Cryptocurrencies?  Facebook Plans to Become World’s Biggest Central Bank?  Who Will Trust Facebook Bank?  Big Banks vs. Big Tech: Are internet giants poised to take over the financial system?  London Fintech Week: Libra, Regulation and the Key to Start-Up Success    An interesting postscript Facebook representatives are still somewhat uncertain about the future of libra. In its second quarter report, the social media giant cited “uncertain and evolving” legislation surrounding cryptocurrencies, investigations from regulators around the world and a general lack of “significant” prior experience with cryptocurrencies and blockchain technology as the main reasons why, for all the hubbub, Libra may never see the light of day. Links:  Libra crypto may never launch due to regulatory scrutiny, warns Facebook  

18. Apple Card review

2019-08-19  

With Apple Inc. starting the rollout of its brand-new Apple Card and its availability expected to reach more than 40 countries by the end of the year, we wanted to take a moment to give you a brief overview of this new payment device.   What is it Apple Card is, first and foremost, a virtual payment card. This means that it is capable of completing payment transactions via contactless payment points or online. How it works Apple Card works through your smart phone or any other Apply Pay-supported device. At a system level, the card connects to a user’s Apple Wallet via his/her Apple ID, meaning that Android users won’t be able to use Apple Card. Apple is also providing users with a physical card to use where contactless payment is not an option. The titanium card is much more secure than traditional credit cards as it only has the user’s name on the front and a strip on the back (i.e. no card number, no CVV security code, no expiration date and no signature on the card). The physical card is activated by synchronizing with an Apple device (e.g. an iPhone), much in the way that Apple’s AirPods work.   How can you get it The Apple Card requires an Apple device running on iOS 12.4 or newer to work. To apply for an Apple Card, a user must simply open the “Wallet” app.   How to pay an Apple Card balance To pay the balance on the Apple Card, simply execute a payment from a bank account linked to the same Apple ID or use existing Apple Cash funds available in the “Wallet” app.   Cashback The Apple Card offers cashback rewards for every transaction:

  • 3% on goods and services purchased directly from Apple (including Apple retail stores, the online Apple store, the App Store, iTunes and Apple Music)
  • 2% cashback on Apply Pay purchases
  • 1% cashback on all other purchases
  Cashback can be earned every day, and cashback rewards can be withdrawn directly into a user’s bank account. Apple Card also features special offers from Mastercard and has no fees (including annual fees, late fees, over-the-limit fees and fees from foreign purchases).   Security For each Apple Card, Apple creates a unique card number that’s stored securely. All payments are required to be confirmed using Face ID or Touch ID along with a one-time unique dynamic security code. For non-Apple Pay transactions on apps or websites that require a card, the Wallet app or Safari web browser autofills the user’s virtual card number.   What you can't buy The Apple Card customer agreement stipulates that the card cannot be used to purchase cash advances or cash equivalents such as cryptocurrencies, casino gaming chips, race track wages and lottery tickets.   Partner Goldman Sachs is Apple’s partner in this endeavor. Prior to their selection, Citigroup was also considered; however, they backed out amid concerns over how profitable the venture would ultimately be. Barclays, Synchrony and JP Morgan Chase have also expressed similar concerns. It should be noted that Goldman Sachs does have access to Apple Card data for internal reporting purposes; however, the terms of their agreement with Apple stipulate that this data cannot be used for any marketing or advertising (internal or external) nor can it be given or sold to any other third party.   Significance Apple Card represents a new step in Apple's efforts to enter the financial sector. Although Apple is recognized in the same light as BigTechs Amazon and Uber, Apple still lags behind as both have already issued their own payment cards and have more experience in providing bonuses and other benefits to clients.   Links: How to apply for Apple Card  Apple Card: All the Details on Apple's Credit Card Apple Card will not allow purchase of cryptocurrencies The Apple Credit Card Review  Apple Card Review Apple Card Review: The Credit Card of the Future Is No Card At All Citigroup bailed on Apple Card because of worries about profits       

19. Video: the threat of payment apps to U.S. banks

2019-08-19  

U.S. banks are projected to lose as much as USD 43 billion in revenue if mobile payment apps become as popular in the U.S. as they are in China. This video examines how cheap and easy phone-based payments are threatening one of the banking industry's most profitable businesses. https://www.youtube.com/watch?v=SJh_Uir5EMI

20. G20 countries discuss new tax system for large internet companies

2019-06-08   forbes.kz

At a meeting of the financial heads of G20 countries in Southwestern Japan, a discussion was held on developing a new tax system for large internet companies such as Google and Facebook. Specifically, the financial heads discussed implementing a tax policy under which such companies would be taxed in each country instead of just the one in which their head office is located. Taxes due in each country would be based on turnover in each country. It is estimated that such a move would add a total of EUR 224 billion to state budgets throughout the world.

21. China’s WeChat: the high cost of digital convenience

2019-07-28   vc.ru

On the surface it may seem the China’s WeChat is a social network like Facebook or WhatsApp. But with more than a billion users and a plethora of functions, it has become a social ecosystem with unlimited possibilities – a messenger, a payment system, an identification system, etc. For most users in fact, WeChat knows: family, friends, topics of discussion, bank details, addresses, bills, purchase histories and so much more. It can even recognize faces and other biometric data.  This obviously has enormous potential for making life easier, but it is also an enormous risk for users. While Western companies like Google, Amazon, Uber, Twitter and Instagram all keep data, they are separate companies that store data separately. WeChat has all this data in one place. This is scary in and of itself; however, when coupled with the fact that Amnesty International scored WeChat’s data privacy level a 0 out of 100 (in comparison, Facebook received a score of 73), it means that there is great potential for data to be used against people in unreasonable/unethical ways (be it by WeChat, the government or hackers). Moreover, the government is pushing for the use of WeChat data to create a social credit system that will reward “trustworthy citizens” and punish others. The real question then becomes: what is the real cost of convenience in a highly-digital world?

22. BigTech’s impending banking invasion

2019-07-08   www.forbes.com

With concerns of a BigTech “invasion” into financing reaching an apex, it seems appropriate to examine BigTechs’ interest in the financial sector:

  • Why might BigTechs get into banking? – financial services already make up about 11% of BigTech revenue streams. Moreover, there is great potential for this to grow in the future, presenting them with an enticing motive to develop more financial products and services.
  • Do BigTechs have an advantage? – BigTechs have become adept at collecting and using the right data, although this data is sometimes less reliable than is ideal for forecasting. BigTechs also have significant networks (via their non-financial-related activities) that they can use to reach consumers; however, they must still be able to build financial relationships and trust as well as overcome key issues such as a lack of regulatory and risk management experience and expertise.
  • Do established financial institutions have an advantage? – established financial institutions have an advantage over BigTechs in terms of having more access to verified and reliable consumer data that comes from years of relationship-building. They also have already developed a wide range of financial products and services based on those relationships as well as a wealth of experience in dealing with regulations and risk management. Additionally, established financial institutions have access to large and relatively cheap funding sources.
 At their hearts, BigTechs are not financial institutions; moreover, most are not sufficiently-incentivized to completely cut financial institutions out of lending or deposit-taking. Moreover, BigTechs can find profit in helping financial institutions underwrite, process and even service loans. So while BigTechs may have an interest in the financial sector, it seems unlikely that a full-scale invasion will involve massive offensives against established financial institutions. Rather, it is more likely that they will offer some (probably relatively limited/specific) financial products and services and work with established financial institutions.

23. Hong Kong facilitating BigTech’s push into banking

2019-05-13   www.businessinsider.com

So far this year, Hong Kong's Monetary Authority (HKMA) has issued virtual banking licenses 8 different groups, including BigTechs, as part of an initiative to promote financial innovation, enhance consumer experiences and increase financial inclusion. The entrance of BigTechs into the financial sector is expected to push established financial institutions into greater innovation, especially as nearly one third of consumers indicated their desire to explore BigTech financial products and services. At the same time, some are worried that the entrance of BigTechs into the financial sector could also push established financial institutions into assuming greater risk, while others are worried that giving BigTechs access to so much data could lead to them having a data monopoly that eventually harms consumers. Good or bad, BigTechs have begun their march into Hong Kong’s financial space, and the end results should show us a lot about how the financial sector will look in the not-too-distant future.

24. Amazon Pay launches Android P2P payments in India

2019-05-01   www.fintechfutures.com

Android users in India can now make instant peer-to-peer (P2P) payments via Amazon Pay through a government-backed unified payments interface (UPI) platform. The new service will also allow customers to make direct payments to local stores from their bank accounts or even to Amazon delivery associates on their doorsteps via a UPI QR code. Multi-factor authentication (involving the customer’s phone number, SIM details and UPI PIN) is used to ensure security. As a launch incentive, Amazon – which is lagging behind P2P rivals in India – is offering its users up to INR 120 (USD 1.73) in cash back rewards.  Amazon is also piloting a business-to-business (B2B) inventory supply and management program in three Indian cities as part of its efforts to serve the country’s 12 million small independent stores. If successful, the program will be expanded across all of India in the near future.

25. BigTechs threaten financial stability

2019-06-11   psm7.com

According to Christine Lagarde, head of the International Monetary Fund (IMF), the entrance of BigTechs into the financial market could adversely affect overall financial stability. Ms. Lagarde specially mentioned concerns over confidentiality and the potential for such giants to eventually drive out competition. Instead, IMF is looking to help member countries take advantage of opportunities to quickly develop financial technology and manage inevitable risks in a responsible way. To this end, they published a 12-point policy agenda in collaboration with the World Bank.

26. The race to digitize banking in the Asia-Pacific region

2019-07-23   www.fintech.finance

Competition in the Asia-Pacific region is intensifying between established financial institutions and the technology and e-commerce disruptors that threaten to carve up the payment solutions market. According to a report by Temenos, BigTech companies like Google, Facebook and Apple as well as major payment players like WeChat Pay, Alipay and PayPal are viewed as the biggest threat by established financial institutions in the region (60%), followed by neo-banks like Volt Bank, Varo Money and Monzo (25%). With these treats in mind, established financial institutions in the region are starting to see mastering digital marketing and enhancing digital engagement as their top strategic priority.  The report also found that emerging regulations in areas such as data protection and digital taxation will have a significant impact on the banking sector, although this is likely to vary by country as each country is being driven by different players. In Australia for example, the government is driving initiatives to increase competition within established regulatory frameworks. In other parts of the region (e.g. Singapore) however, players themselves are driving initiatives as a way to remain competitive. In China, tighter licensing and data protection rules are set to diminish the power of Alipay and WeChat Pay’s duopoly.

27. China’s TechFin giants

2019-04-01   thefinanser.com

Chinese tech firms are moving into the banking sector in a much different way then their Western counterparts. Whereas Western BigTechs like Amazon and Google seem content in serving financial institutions with cloud features and advertising, Chinese ones like Tencent and Alibaba seem far more interested in competing with financial institutions. For example, Tencent’s WeBank was China’s first private digital-only bank, one that made a net profit of USD 210 million with a return-on-equity of 19.2% in 2017, just its 2nd year of operation. In fact, a recent stake sale of the bank valued it at USD 21 billion, making it one of the world’s largest “unicorn” companies. At the same time, Alibaba’s Ant Financial offers a number of products and services, including: Alipay, the largest mobile wallet in the world; Yue’Bao, the largest money market fund in the world; MYBank, an online lender for small businesses; Ant Fortune, a wealth management service; and Zhao Cai Bao, an investment marketplace. 6 months ago, they also launched a new health insurance service that has gained 50 million customers already and aims for 300 million within its first two years of operations. Ant Financial was valued at USD 150 billion in 2018, making it the 10th largest financial firm in the world in only its 5th year of operation. There might not be the massive global change in banking that some soothsayers have been predicting, but there is likely to be one in China as tech companies rewrite how consumers interact with everything financial.

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28. Opportunities for wealth managers in the growing gig economy

2018-05-16   www.ey.com

The rise of gig workers represents a disruptive force in wealth management that presents both challenges and opportunities. As gig workers don’t have access to employer-sponsored benefits, it can often be a challenge to get them to engage in the wealth management industry. In fact, a global study of gig workers found that 44% aren’t saving for anything and 22% only save on occasion. At the same time, gig workers tend to be more involved in their own personal finances, presenting a consumer segment for wealth managers to engage with. To do so, wealth managers will first need to understand how and why individual workers select particular types of gigs, which will allow them to analyze the implications of those choices and begin predicting what each gig worker’s financial needs are. They will also need a combination of new and existing capabilities, with clear strategies and the ability to build effective external partnerships as well as human and machine touchpoints that best suit each investor’s needs and preferences.

29. The rise of BigTechs in finance highlights important issues

2019-06-23   www.forbes.com

BigTechs have been rapidly moving to offer a wide range of financial services. But the role of BigTechs in the financial sector raises numerous issues as BigTechs are not regulated like financial institutions and, therefore, are not subject to the same stringent capital, leverage and liquidity constraints. While this can have numerous advantages, especially in terms of increasing access to finance or access to more-affordable finance, it is also important that regulators carefully monitor and guide this process in order to ensure fair competition and consumer protection. But regulating BigTechs’ financial services activities will not be easy. Even when objectives are clear and uncontroversial, selecting the most appropriate policy tools will require navigating complex interactions. This includes navigating along two dimensions: (1) how much BigTechs will be encouraged/allowed to enter into the financial sector and (2) how data will be treated. In the end, it will be up to a combination of the market and regulators to answer these questions and strike the right balance that ensures fair competition and proper data protection.

30. The difference between FinTech and TechFin

2019-05-15   payspacemagazine.com

In 2019, FinTech is not a new concept, with most people having at least some understanding of it. But this is not the case for TechFin. What is it? And how is it different from FinTech?  At its most simple level, FinTech refers to financial companies looking at technology as a way to improve services and consumer experiences. TechFin, on the other hand, refers to a technology firm that wants to deliver financial products on the basis of existing tech solutions (e.g. Google, Amazon, Facebook and Apple). Jack Ma, a co-founder and executive chairman of Alibaba Group, has described the difference between Fintech and TechFin in an interesting way: “There are two big opportunities in the future financial industry. One is online banking, where all the financial institutions will go online; the other is internet finance, which is purely led by outsiders”. In other words, it really comes down to a matter of how each approaches financial services.

31. 5 competitive strategies for facing the BigTech threat

2018-09-01   www.bankingtech.com

Today’s consumers want the same level of experiences they get from financial institutions as they get from BigTechs like Amazon and Google. The reality, however, is that most financial institutions do not currently offer this level of experience, meaning that, when BigTechs start delivering banking services, financial institutions may well be in trouble. Here are 5 competitive strategies to help them face the BigTech threat:

  1. Minimize negative impacts from legacy systems – legacy systems impede information flows. As completely replacing them is unlikely in the near future, financial institutions should focus on choosing an information management solution that offers a flexible, adaptable framework capable of communicating with both legacy systems and leading-edge technologies.
  2. Get full visibility across content silos – finding necessary information is time-consuming and challenging when it is fragmented across multiple units and systems. A solution that allows for data to be gathered regardless of where is resides is imperative to increasing data usability without disrupting how teams get work done.
  3. Think smaller – financial institutions face increasing demands for faster, easier interactions, all while still using slow-to-change, clunky monolithic platform systems. They can, however, become competitive by adopting digital-first models that leave single-vendor solutions behind in favor of adaptable component architectures.
  4. Tame information chaos – analytics are key to unlocking the value of data. Using an information platform to manage data allows not only for data to be easily visible, it also allows for data to be analyzed and visualized for more informed decision-making.
  5. Prioritize scalability – many systems that financial institutions use are not capable of scaling to accommodate the rate of growth they are (or will) experience. They should use scalability as a primary vendor selection criterion.

32. BigTechs march to battle in the financial sector

2019-03-29   dailyfintech.com

Over the past few years, there has been much made of the FinTech boom and how tech- and financially-focused companies were invading the financial sector from seemingly every corner. A new player, however, is entering the sphere and making even bigger waves. BigTechs (also known as TechFins) have swooped into the sector, taking many financial institutions off-guard. Perhaps nowhere else is this more evident than in China, where Alipay and WeChat are providing innovative financial services that are dominating. With IBM entering the remittance market through World Wire, Facebook testing out WhatsApp payments, Alipay entering the UK market in a big way and Apple announcing its Apple card, it is clear that struggles with FinTechs were a mere distraction in comparison to what will likely be a major battle with BigTechs in the years to come.

33. BigTechs push into the asset management industry

2019-06-11   www.bankinghub.eu

BigTechs – with their size, brand recognition, distribution capabilities and technology – are already active in the financial services industry and have sufficient motivation to enter the asset management industry. With consumer trust in BigTechs now equal to their trust financial institutions and even ahead of their trust in fund managers, it is interesting to look at what BigTechs can offer. There are 5 big strengths they have in the asset management industry:

  1.  access to big data,
  2. technological capacity to process and analyze massive amounts of data,
  3. efficiency/agility to initiate innovative changes,
  4. extensive knowledge of consumer attitudes and habits 
  5. sales strength through brand loyalty and established trust.
 As BigTechs begin to make the jump into the asset management industry, there are four main market entry options to consider: building their own asset management division, white labeling products from other asset managers, merging with/acquiring other asset managers or extending existing collaborations. Each has its own unique advantages and disadvantages, and it is important that traditional asset managers are aware of these as BigTechs move further into the industry. To compete, current players must work to improve digital services and build brand recognition and consumer loyalty. In particular, current asset managers should focus on leveraging technological capabilities to increase efficiency and agility. This includes taking data management to the next level.

34. 4 lessons financial institutions can learn from digital-centric companies

2019-02-13   www.businessinsider.com

Digital-centric companies like Amazon and Uber have raised consumer expectations regarding the experiences companies provide. These expectations are even being placed on financial institutions. Here are 4 lessons the financial industry can learn from digital-centric companies:

  1. Be obsessed with consumer experiences – younger generations have come to expect companies to be focused on them and their needs. Financial institutions cannot afford to place a priority on their own needs at the expense of those of consumers.
  2. Make digital invisible – financial institutions need to concentrate on minimizing the effort required for consumers to do common tasks like making a payment, transferring money or even applying for a small loan. Digital and analog should also be seamlessly connected.
  3. Worry about what will change, but focus on what won’t – in 10 years, people will still need mortgages, small business loans, checking accounts, etc. Financial institutions need to keep those types of activities in mind when implementing ways to make interactions easier.
  4. Make data a driving force – financial institutions have a data-heavy relationship with consumers. This should be used to help consumers spend and investment more wisely. 
 

35. 12 lessons all industries can learn from BigTechs

2019-06-18   www.forbes.com

While most companies turn to BigTechs for ways to make work easier (e.g. with software and apps), they can also teach all industries other valuable lessons about how to do business. Here are 12 ways non-tech industries can learn from BigTech:

  1. Embrace failure – non-tech industries should learn to embrace failure and keep trying new things. Some will work out and result in pushing industries forward.
  2. Focus on consumer experiences – people no longer buy just products and services; they buy experiences. On average, consumers are prepared to pay 4.5 times more for a good experience.
  3. Consider the human factor – solutions cannot be completely solved by technology itself. Human elements are crucial, especially in areas where tech can’t yet solve a problem.
  4. Treat employees well – employee enthusiasm is vital for increasing retention. Making life easier (e.g. offering catered meals, providing childcare) results in happier, more productive and loyal employees.
  5. Be responsive and agile – being able to change and adapt to new market realities is fundamental in today’s fast-paced, constantly-changing environment.
  6. Streamline processes – leaner teams that are agile and streamlined help reduce timelines, improve consumer feedback and allow employees to innovate.
  7. Correct mistakes quickly – consumer trust is important and vanish quickly. Being able to admit and rectify mistakes is the best policy for any business.
  8. Develop more than an idea – companies need to develop something unique and different that goes above and beyond, otherwise they are likely already behind.
  9. Don’t focus on project management – project management offices, by and large, don’t exist at BigTechs. Instead, they treat product development as a predictable manufacturing line, with everyone involved from start to finish.
  10. Put consumers first – BigTechs are laser-focused on satisfying customer needs. They tend to outsource things that take away from that focus.
  11. Fail quickly – BigTechs have learned to make decisions quickly and, perhaps more importantly, to unmake decisions quickly.
  12. Work smarter – stop wasting time on tedious manual processes and find a way to automate them. It’s not just about working faster; it’s about working smarter.

36. EBAday 2019 panel: will BigTechs come to dominate instant payments?

2019-06-18   www.finextra.com

At EBAday 2019, a group of panelists discussed the likely future of instant payments in a world of open banking. The group noted that major progress is already being made in some areas of the world and that Europe stands to lose out in its own backyard to China and the U.S. if it doesn’t start making waves and fostering an atmosphere of collaboration. For most involved in the financial sector, the main question seems to center around how open banking standards will eventually settle as APIs are still very fragmented, although there is a light at the end of the tunnel with regulations starting to introduce a common set of standards. The other big question is who is more likely to push innovations and become the leaders of tomorrow: will it be traditional financial institutions or will it be BigTechs? While there has been much made of how BigTechs are continuing to push into the financial sector with their large consumer bases and drive for providing consumers with fast and easy solutions, it should be noted that traditional financial institutions are demonstrating a willingness to embrace PSD2 legislation. In fact, many are active in delivering beyond PSD2 and beyond a limited API scope. It should be remembered that we are still in the infancy of this and that there is much growing and learning to do. What is certain is that the world is moving, thanks to increased consumer expectations and open banking, toward a different standard of normal. And it should be interesting to see how it all shakes out.