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From Amazon to Uber: why Invisible Finance is imminent

From Amazon to Uber: why Invisible Finance is imminent | Disruptive Finance and Fintech | Scoop.it
It may look like shoplifting, but it's actually Amazon's latest real-world shopping experiment.
Huy Nguyen Trieu's insight:

Amazon's latest announcement of Go, a supermarket where consumers can get in, "grab what they want and simply walk out" was funnily described as "shoplifting" by CNET. 

But this is of course not a surprising development, since we might expect most supermarkets to move towards such frictionless experiences in the future. Because this replicates in the real world what Amazon has been doing for years with 1-click buying on their website. Or our experience of getting in an Uber and exiting the car without the need for a physical act of payment.

 

Because we are now used to 1-click buying or Uber's frictionless payment, we tend to overlook the fact that this is one of the most important trends in finance today: Invisible Finance. (this is one of my favourite trends, together with "data monetisation" and "white space"). At a high level, one of the objectives of finance is "just" to facilitate commerce, and there is no need for finance to be visible. If I receive groceries from my supermarket and pay with my credit card, the act of "receiving groceries" is important, but "paying with my credit card" only exists because there is no other way for the supermarket to debit my account.

But in a distant past, the grocer would keep a tab of my spendings because he knew who I was - which is what technology is bringing back to the table today through my smartphone and finance can become invisible again

Whether Amazon succeeds in their endeavour is still to be determined, but there is no doubt in my mind that invisible finance will be a very significant trend in the future. First, because with shopping cart abandonment that can reach 97% on mobiles (i.e. only 3% of consumers complete their purchase!), there is a very strong need for e-commerce to make the process as easy as 1-click. But also because consumer behaviours are changing, and they will be less and less tolerant of confusing checkout processes. 

 

This of course will have a very profound impact on the business model and value proposition of banks and credit card companies. Who still remembers what credit cards they are using in their Uber account? Even when consumers have stored multiple cards in their Amazon account, it's likely they will always use the same one: the default credit card. The brand power and marketing strategies of credit card companies and banks will therefore need to adapt. 

But more importantly, losing the customer relationship can be a significant game changer for finance. From a credit card to mortgage, from a saving account to a loan, financial institutions have always been very visible to their clients - and own the relationship. If these financial transactions are totally embedded by the e-commerce companies, how will banks continue to own the relationship? If this concept of "customer relationship" seems a bit theoretical, look no further than the hotel industry where hotels have lost the customer relationship to the benefit of websites such as Booking.com. The result is that Booking.com now has more pricing power than the hotels. That results in a market capitalisation higher than all the major hotel companies combined...

 

On the other hand, there could be many opportunities for banks to offer new services, from automated mortgages to API-based loans.

 

There will therefore be interesting strategies for financial companies to consider, but one thing is sure: the emergence of Invisible Finance has begun...

 

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What are Innovation Labs for?

What are Innovation Labs for? | Disruptive Finance and Fintech | Scoop.it
Start-ups are increasingly turning to large banks – the very institutions that fintech is supposed to be disrupting – for mentorship and money.
Huy Nguyen Trieu's insight:

Very interesting overview of innovation labs by Simon Mortlock with a few quotes from yours truly. 


I will not try to paraphrase the article but a few observations come to mind:

- Innovation labs are extremely useful to large organisations, as a way to interact with startups, get new ideas and source potential suppliers/investments. However, it seems that innovation labs are not that common yet (vs. corporate venture funds for example)
- For startups, I believe that units like innovation labs are a must. I previously wrote that working with a large company  can be a fatal experience for a startup and innovation labs are certainly a valuable entry point into the large organisations.

- Finally, if anyone doubted the interest of Fintech for bankers, then have a look at eFinancialCareers. It is the largest careers site for finance professionals, and Fintech articles are now commonplace  - whereas they were much scarcer even a few months ago.  


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Bank for Boston carpenters wants to become Fintech Bank

Bank for Boston carpenters wants to become Fintech Bank | Disruptive Finance and Fintech | Scoop.it
Radius Bank, started by and for local union carpenters, is about to be bought by the ultimate capitalists.
Huy Nguyen Trieu's insight:

This is an interesting strategy - and perhaps not as crazy as it sounds. The Boston Globe relates the sale of First Trade Union Bank (rebranded Radius Bank) to private equity, which intends to transform it into a pure digital bank, as well as a bank serving Fintech providers

Since Radius is a tiny bank ($1bn assets), it faces the same issues as many of small community banks. It doesn't seem that crazy therefore to focus on 1) digital and 2) serving Fintech startups. As I mentioned in a previous article, Fintechs such as Neo-Banks need an actual bank to operate, and Radius could be such a bank. This is for example what WebBank did with Lending Club. 

For Radius, a very small bank under huge competitive and regulatory pressure, selling shovels in the Fintech gold rush might be an exciting opportunity...


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Is more data good or bad for finance? And society?

Is more data good or bad for finance? And society? | Disruptive Finance and Fintech | Scoop.it

A standard line you hear from fintech promoters is that innovative digital technologies can liberate the world by bringing financial services to the financially excluded.

Yet, as we've noted on numerous occasions, there's something disingenuous about this claim."

Huy Nguyen Trieu's insight:

Last week, I tried to put on (electronic) paper what I thought would be the main game-changer for finance in the next 10 years and was delighted to receive very insightful comments from many people. 


In a few words, I thought that traditional finance was not monetizing data in the way that other companies like Google or Credit Karma were doing, and that data monetization would significantly impact business models in finance. Some people agreed, some argued that banks were already monetizing data - just not in the same way as Google -, some thought that it was rubbish! Fair enough, it's hard to know what the future will be, and we're all guessing...


I was also absolutely delighted when Izabella Kaminska from FT Alphaville quoted my piece in her article "When financial inclusion stands for financial intrusion". (I am a big fan of hers, and her healthy skepticism about 'technological progress'). I wouldn't do her much justice by paraphrasing her thoughts, so I encourage you to read her excellent piece. It reminds us that there is much to be learnt from history, especially when we think about data privacy rights. 


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