– It is undeniable: in this information age, cash is becoming more and more unfavorable to regulators. Indeed its alternative – the digital currency – has all the advantages that regulators want: real time settlement, little transaction cost, absence of counterfeit money and reliable traceability (which renders tax evasion and money laundering near impossible). However, a lack of suitable and practical technology has been holding central banks back from realising these benefits, and for the most part of the decade we have only seen private application of the digital currencies. It was not until the rise of the cryptocurrency (a subset of digital currency) that central banks really started to consider adopting an official government-backed digital currency – one that utilise the innovative model of distributed ledger
To some extent, the FinTech movement is not necessarily an all-out revolution. Indeed many FinTech solutions bear marks of the traditional roots of retail banking. For instance in our last post we mentioned Peer-to-Peer (P2P) platforms and the shift towards frictionless transactions and disintermediation. While the former is undoubtedly a product of new technology advances, the latter is not at all novel. Effectively P2P platforms could be more accurately viewed as a transparent and frictionless version of the traditional financial intermediary model. Read More
For quite some time, innovation in banking was highly scrutinised and frowned upon. Fresh out of the big crisis, at first all that people could associate with the term was debt securitisation and risky investments. With regulation also tightened up (especially for incumbents), this seemingly created the notion that banking was to remain a stronghold from innovation and that disruptive waves from technology advances would not affect the industry as a whole. And yet, almost a decade later, that notion no longer holds true. FinTech innovators with solutions that tackle real customers’ needs whilst guaranteeing a top-notch user experience, are redefining how banking should work.
Premise: you are the CEO of a hot and well-funded start-up, in your early twenties to thirties. The press has started referring to your company as the next big break to watch. Sounds all good? Not quite. Investors are pushing fervently for more and more growth, but you are unsure whether the company can technically and operationally handle the expanded amount of service. You don’t know which business processes can stay relatively unchanged and which need to be upgraded. You can’t tell who in the firm is delivering good services and who isn’t. Worse still, time isn’t on your side. All of these quickly pile up while you are pushed to the edge of your nerve. Eventually you suffer from the “founder depression” syndrome *
Growth by default is the number one priority for start-ups. Understandably, the only reason why investors would want to put money into businesses with no collateral is capital gains. While the average investment’s required churn out is usually a reasonable 10-20% annual ROI, venture capitalists expect start-ups to grow at a substantially higher, and in some cases near impossible, rate. What this means for the young business is that operation will always have to be pushed towards a constant growth goal when many of their processes are not yet ready for the job.
As the Financial Service revolution gains traction, FinTech start-ups can soon expect a period of rapid growth.
Scaling up however, is no piece of cake. Technical challenges aside, a company’s processes should also be re-assessed for compatibility with any additional operational capacity. Unsurprisingly, process problems – or gaps – are a common sight in young businesses trying to expand in scale or scope, regardless of which field they operate in. Read More
Branching off from a previous post “Does the Rise of Fintech Reflect the Future of Banking,” questions might arise as to the role of risk in this forever changing IT landscape.
Risk plays a role in all walks of life and influences how we operate, whether it is making a financial investment or choosing to travel to an unknown location. Every action can spur unknown events that will have an effect on the outcomes of an objective. With a changing environment, there are a lot of unknowns and the future of banking is no exception. Read More
In our most recent post we discussed the disruptive nature of new technologies to the financial service landscape. This week let’s take a closer look at one of the most lucrative segments in the business: payments.
Payment has always been an integral part of a successful business, be it the local coffee shop or a continental air carrier. As more and more transactions move to mobile devices, so do payment systems. But is payment a process due for major upgrades? And which system(s) would be dominating the field?
We have previously blogged about the effect of disruptive technologies on the banking industry. As we speak there is an ongoing battle to determine the future of banking as an industry. Today’s news is densely populated with comments about company’s developing mobile payment solutions and alternative methods to borrowing money. Speculation has arisen as to how companies like the tech giant Alibaba might cooperate or even challenge financial institutions. FinTech startups are getting ever increasing funding and support in the UK. With the introduction of new technologies, it would appear as if the race to find the next financial success story has begun. However a question arises: does this highly competitive market reflect the future of banking? Read More
There are many ways to deal with ineffective and inefficient process. You can create workarounds. You can bubble-wrap it with additional processes as a form of assurance. You can always do nothing, especially if you don’t care enough about the results at stake. And sometimes – if you are serious about long-term value of the process – you can fix the root cause itself.
cibsys has recently conducted a process efficiency review for one of our clients. Within that assessment, weidentifiedactivities in the operational process that were a form of assurance rather than value-adding activities. Effort-intensive manual intervention was used to assure that system errors were caught before appearing to customers. Such manual intervention, of course, did not address the root cause of the problem. Neither did it guarantee timely and appropriate fixes. Read More