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How Fintech is forcing banking to a tipping point [Citi report]

With advances in technology, the relationship that customers have with their bank and with their finances has changed. Customers rely less and less on walking into a branch for their banking needs, and instead have digital options to help them —ATMs, on-line chat, mobile phones, and Internet banking. So far these have been seen more as additive to a customer's banking experience but when do we go over the digital disruption tipping point and see a change in the fundamental banking business?

Huy Nguyen Trieu's insight:
Huy Nguyen Trieu's insight:
Excellent report about Fintech and digital transformation in finance by the team at Citi - a real treasure mine of 100+ pages! Link to the report here 

 

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Fintech: what's happening in Australia?

Fintech: what's happening in Australia? | Disruptive Finance and Fintech | Scoop.it
This article contains an overview of the Australian FinTech ecosystem with some of the most interesting startups and successful accelerators/incubators.
Huy Nguyen Trieu's insight:


I believe that a lot of interesting Fintech innovations will take place in Asia. But for me, Asia was more naturally Hong Kong, Singapore, Indonesia or the Philippines than Australia… 

Over the last few months however, we have observed more and more  interesting initiatives in Australia - from the launch of a Fintech hub, to partnerships between banks and startups, to the first investment of Australian pension funds into Fintech startups….

Australia is definitely a market to follow, and this article from Let's Talk Payments provides a great overview of the latest developments. 

Don't hesitate to send me a tweet if you see interesting Fintech startups in Australia...


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And now Blackstone: the Big Guns are entering Online Lending

And now Blackstone: the Big Guns are entering Online Lending | Disruptive Finance and Fintech | Scoop.it

"The start-ups that have come to dominate the online-lending industry will now have to compete with the world’s largest private-equity firm.

B2R Holdings, a portfolio company of a Blackstone Group fund, said on Thursday that it was getting into the business of providing loans for consumer purchases of big-ticket items as well as small-businesses loans."

Huy Nguyen Trieu's insight:

I previously wrote about a game changer in Fintech, when Goldman Sachs announced the launch of an online lending business for their SME clients (and very proud that you read about it in Disruptive Finance one month before the FT and the WSJ!). To my knowledge, this initiative is still moving ahead, and GS is hiring people from Lending Club / Prosper to develop the platform. 

At that time, I also said that "it will be fascinating to see what happens over the next few months, and if other banks will follow suit", and they have! Most recently, ING, Santander and Scotiabank have invested in Kabbage (a data-driven lender, and one of my favourite Fintech startups) and ING and Kabbage will launch an online lending business in Spain. In my opinion, there is no doubt that online (data-driven) lending will be the norm, and banks will move towards that model, whether through internal development, partnership or acquisition. We are therefore likely to see more news of this type in the future. 

When we think of finance, let's not forget however that private equity firms are also very massive. It was therefore extremely interesting to see Blackstone is launching an online lending platform, Lending.com.  Which means that after startups doing online lending, banks doing online lending, we now have shadow banking doing online lending. Whereas banks are very aware of the potential disruption from startups, does it mean they also need to watch the competition from private equity firms? What is clear, is that technology is currently reshuffling the financial sector, and disruption might come from players we don't suspect. 


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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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Trends in Fintech Startups: Data, Payments, Lending and SMEs

Trends in Fintech Startups: Data, Payments, Lending and SMEs | Disruptive Finance and Fintech | Scoop.it

Fintech hackathons and competitions occur globally. In January 2012, Swift launched theInnotribe Startup Competition as an initiative to bring together disruptive startups and incumbents in financial services...

Huy Nguyen Trieu's insight:

Very interesting overview of the most popular sectors for Fintech startups (or at least those that manage to win events such as hackathons).

I am happily surprised by the number of startups involved in data analysis (which is one of the most promising opportunities in my opinion). I am not too surprised though by the large number of startups in payments, lending and SMEs, they are usually quite popular sectors. 

It seems that Blockchain is under-represented in the rankings, especially considering the huge noise in that space. 

And if there was one obvious category missing, that would clearly be insurance. They might be aggregated in "Others", but still it shows that the focus on Insurtech is still very low - this is certainly one of the interesting opportunities for startups in financial services.

If we take a step back, it's quite incredible that the writer found 186 winners across 18 Fintech competitions - how quickly the world has changed in just a few years, where there were not even 186 Fintech startups globally! There is definitely a healthy eco-system for entrepreneurs in Fintech today..

And on a separate note, very proud to be on the advisory board of  Trusting Social - one of the 4 startups mentioned (out of 186).


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SoFi: a Fintech that uses Techniques from Traditional Investment Banks

SoFi: a Fintech that uses Techniques from Traditional Investment Banks | Disruptive Finance and Fintech | Scoop.it

"SoFi, a marketplace lender, announced it has priced a securitization of $417.6 million in refinanced student loans. It also announced SoFi was considered the first fintech company to receive an “AAA” rating from DBRS and an “AA2″ from Moody’s for the senior notes, which equaled $387.3 million."

Huy Nguyen Trieu's insight:

SoFi is one of the most interesting p2p lenders in my opinion. Although they are less well known that Lending Club or Prosper, they are perhaps the best to combine traditional finance to online lending.


They were the first to use securitization for their loans, then the first to get a rating from S&P, and now to get a AAA rating (arguably from DBRS, not S&P or Moody's).


They mention that 2/3 of all securitizations in online lending are made by SoFi. They are definitely a company to follow, because they are a good example of how online lending could be a part of traditional investment banking in the future.


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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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Ex Google Boss Launches Credit Scoring Startup

Ex Google Boss Launches Credit Scoring Startup | Disruptive Finance and Fintech | Scoop.it
Dan Cobley has co-founded ClearScore, which opened to the public today. His fintech company builder Brightbridge is putting £10 million into the business.
Huy Nguyen Trieu's insight:

Credit scoring is one of the most interesting areas of Fintech in my opinion (disclaimer : I am on the advisory board of Trusting Social).


In the same way that Google or Facebook monetize data by selling targeted ads, credit scoring is the equivalent in finance - but in a much more powerful way, because it involves financial data. So it's clearly not a surprise to see an ex Google launching a startup in that space. 


At the moment, ClearScore seems to be similar to Credit Karma - helps users to improve their credit score - but it wouldn't be surprising that the long-term plan is about monetization of financial data


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6 days left to register for the European Fintech Awards

6 days left to register for the European Fintech Awards | Disruptive Finance and Fintech | Scoop.it

"Join the European FinTech Awards and Conference where innovative and disruptive FinTech companies are awarded. Meet 400 hand picked entrepreneurs, bankers, investors and advisors, extend your network and develop business."

Huy Nguyen Trieu's insight:


The European Fintech Awards (Amsterdam, April 14) should be one of the interesting Fintech events of 2016. There are obviously a lot of Fintech awards, rankings, etc. and they should be taken with a pinch of salt - in my opinion, the only important award really is the commercial success of the startups.

But in an industry where there are now thousands of startups, there is a certain merit in having other people do the work, scan the market and discover promising projects.

So I'll be one of these people who likes to spend hours reviewing startups (together with a stellar panel of judges) and tries to identify the next Googles of finance. To be fair, it won't be only the judges who will do the work, since the Fintech 100  will be selected through an online voting process first, and only then will the judges select the overall winners.

So if you are a startup and want to participate, you have until January 24th to register... 


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Free passes for Fintech Connect Live in London!

Free passes for Fintech Connect Live in London! | Disruptive Finance and Fintech | Scoop.it
Europe’s most exciting exhibition of fintech startup innovation is here! 2000 Fintech professionals all together in one place for two …
Huy Nguyen Trieu's insight:

As a perk for being on the advisory board of Fintech Connect, I've received free passes for Fintech Connect Live - which is one of the largest Fintech conferences in London this year. 

The agenda is great, from blockchain to Insuretech, from digital transformation to online lending. 

There will be 2,000 attendees, of which 30% are startups, 15% investors, 25% coming from traditional finance, and the rest being split between government, providers, etc. With a superb line-up of speakers, it should be an amazing event. 


If you'd like to attend, just register and enter the code FTCL100 that gives a 100% discount, i.e. a free pass! The code expires after the first 25 readers of Disruptive Finance have used it, so don't wait if you're interested....


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World Economic Forum: Fintech will revolutionise SME financing

Huy Nguyen Trieu's insight:

This is an excellent report from the World Economic Forum, and it is very telling that they chose SME financing as one of the key topics in the future of finance. The WEF is interested in topics that are important for society but also tries to identify the levers that have the most leverage to "create a better and more stable world". This is the reason why SME financing is important (SMEs represent 60% of global GDP, both in developed and emerging markets). 

On the other hand, I also believe that SMEs are one of the most interesting markets for Fintech - many of them would be unbanked or underbanked, especially in emerging markets, and the financial services offered to SMEs haven't really evolved for the last 50 years. 

In conclusion, the SME market is a good business opportunity for entrepreneurs, and improving finance for SMEs has a clear positive impact for society and the economy.  One of the reasons I love Fintech...


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Sheeba Hernández's curator insight, November 20, 2015 7:27 PM

A study on the future of fintech, by the World Economic Forum.

 

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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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Why did Blackrock pay $200m for FutureAdvisor?

Huy Nguyen Trieu's insight:

It seems like I could start writing a series around this theme, after "Why did Northwestern Mutual pay $250m for Learnvest"


FT Partners - who were the advisors of Blackrock in the transaction - produced an excellent document that not only summarises the transaction, but also lists all the main transactions (M&A and funding) in the robo-advisor space. 


The valuation of the deal is not public, and is rumoured between $100m and $200m. The previous valuation from their VC round was $75m a year ago, so $200m for example wouldn't seem crazy. 


In the case of FutureAdvisor, the traditional valuation metrics clearly do not apply. If FutureAdvisor was valued as a traditional asset manager, their valuation would be more around $30m assuming they have around $1bn under management. Why would Blackrock pay such a premium for a startup that is clearly growing, but hasn't yet proven its revenue model ? 


My view is that there are 4 main reasons why Blackrock bought FA, (or Northwestern bought Learnvest, BBVA bought Simple, etc.): 

- Acquires a product with a user interface that gets client traction. The difficulty of creating a product that appeals to consumers shouldn't be underestimated.

- Helps to launch a new offering, integrated with their existing ones, very quickly. 

- Injects innovation in their organization, through the integration of the startup team.

- Signals to the organisation, and the markets, the strong focus on innovation.


For startups that manage to build a strong product, but find  that customer acquisition is too expensive, this would be a natural exit strategy. For traditional finance, that is a way to boost their innovation efforts at a moderate cost. For these reasons, we are likely to see other similar deals in the future. 


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Fintech in Asia is taking off

Fintech in Asia is taking off | Disruptive Finance and Fintech | Scoop.it

Available from today, local growth-stage start-ups and mature-stage global FinTech companies can apply for a co-working space within the SuperCharger.


As part of the TusPark network, companies benefit from: access to TusPark's Global Network, which includes 30+ co-work spaces around the world, 100+ Venture Capital Firms and angel investors, media coverage, as well as experience gained from incubating over 1'500 companies…."

Huy Nguyen Trieu's insight:

I am convinced that London is the world capital of Fintech (here and here), but equally confident that a lot of innovations will come from emerging markets, and especially Asia. 


I've had the chance - and great pleasure - to be on the advisory board of Fintech HK and to witness first hand the incredible growth of Fintech taking place in Asia during the last year. Fintech HK is itself a very good example of that hypergrowth, which started less than a year ago with a report on Fintech in HK, and has now become the largest Fintech ecosystem in Hong Kong.


They have now just announced the launch of the SuperCharger, a whole floor dedicated to Fintech in HK, in partnership with Tuspark - a Chinese tech holding that owns 400 companies. 


A few years ago, Fintech was still nascent in London but then took off swiftly thanks to the arrival of accelerators, which helped create an ecosystem of mentors, business angels, banks, etc The same is happening in Asia, with the launch of StartupBootCamp in Singapore, DBS Nest in Hong Kong, and now the SuperCharger.


As the ecosystem grows stronger, we are seeing more and more interesting Fintech startups there. And examples like Alibaba's YueBao (4th largest money market fund in the world in less than a year), or Vietnam (36% penetration rate for smartphones, despite an average wage of $150/month) show that there are a lot of Asian specificities that will allow a very different type of Fintech to emerge. 


In other words, there are likely to be very interesting Fintech stories - especially in B2C - coming out of Asia. Stay tuned...


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Let's Talk Payments's comment, August 28, 2015 7:04 PM
FIntech industry is gaining momentum in India too: http://letstalkpayments.com/fintech-studio-special-accelerator-program-shaping-up-in-startup-village-in-kochi-india/
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Singapore Financial Regulator Launches Fintech Group

Singapore Financial Regulator Launches Fintech Group | Disruptive Finance and Fintech | Scoop.it
The central bank has formed a new work group to develop strategies and formulate regulation around the use of new technologies in financial services.. Read more at straitstimes.com.
Huy Nguyen Trieu's insight:

Regulation can have a huge impact on startups, and especially Fintech startups. Usually people think that Fintech startups have an edge because they are less regulated than traditional finance, but I think that it's not the case anymore - any entrepreneur who wants to build a world-class company now has to integrate regulatory concerns in his business plan. 


However, it's very difficult to know what is the regulatory framework in a field that doesn't exist! For example, crowdfunding, p2p lending, digital currencies, etc. are very new concepts that do not fit neatly into any existing regulations. I was therefore very impressed by the initiative of the UK regulator last October who basically said:


- They want to promote innovation
- Innovation often comes from startups
- Startups do not have the means to spend money on lawyers, etc.to understand regulations which are still changing
- The FCA therefore set up a group for startups to have a direct line to the regulator - to address regulatory issues from outset


At pretty much the same time, Singapore was also looking at ways to make Singapore the hub for Fintech in Asia - with an investment of Infocomm in StartupBootCap, representatives of MAS in London discussing with the FIntech ecosystem, etc


This initiative from MAS - very similar to the FCA's last year - is therefore very impressive too, and this is exactly what is needed to build a strong framework for FIntech in Asia.


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