The volume, velocity, and variety of data that financial companies are relying on is overwhelming, but there are game-changing technologies that can tame the data and provide indisputable value.
The lesson to learn from so many tech efforts that have drawn protest: social equity must become central to every project that taps data-hungry tech to deliver citizen services.
Despite Facebook’s reach, IMD professor Howard Yu and research fellow Jialu Shan break down how its Libra digital currency is no match for legacy financial institutions.
Open banking is already happening in the market and regulators need to catch up
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
How Big Data and Blockchain are enhancing FinTech
Medium | Maria Wachal | Oct 29, 2019
The volume, velocity, and variety of data that financial companies are relying on is overwhelming, but there are game-changing technologies that can tame the data and provide indisputable value.
FinTech companies want to provide personalised and innovative services and products to accelerate customer experience. Customer centricity enabled with data analytics is the number one priority for this sector. Injecting financial sector with advanced tech like Big Data and Blockchain can enable banking and finance go far beyond cashless payments and mobile services toward personalised customer experience that will transform FinTech further.
The revolution number 4
Humankind witnessed so far 3 industrial revolutions that impacted production. During the 1st revolution people started using steam power and machines replaced muscle power. The 2nd revolution changed our lives with the introduction of electricity. Finally, when the computer chip was invented, we witnessed the 3rd revolution which not only automated production, but changed our personal lives for good.
See: How Small Businesses Can Compete By Leveraging Data Insights
The 4th industrial revolution — the digital transformation — is happening right in front of our eyes. It is fuelled by Big Data powered by Artificial Intelligence and Machine Learning, and technologies like Blockchain, that can significantly impact the way the world is progressing.
Big Data in FinTech
We live in a world of hyper-personalization and financial firms want to deliver the promise of personalized customer experience. Being data-driven and leveraging indirect information about customers to transform them into valuable insights is crucial. The notion that can speed up the evolution in this area is the implementation of the real-time self-learning data models that can provide analytics for every single outreach and interaction.
When we talk about collecting data about customers, we are typically referring to 5V characteristics of Big Data:
- Data Volume — a huge volume of quotes, market data, and historical trade data.
- Data Velocity — the speed at which the data is being generated. The faster trade data is processed, the faster it can be applied for trading.
- Data Variety — the existence of various formats and sources of data that can be be structured or unstructured.
- Data Veracity and Data Value —the quality and usefulness of the data.
There are various opportunities for applications of Big Data in the finance world that could significantly boost predictiveness and relevancy of data, because data needs to be rigorously analysed and assessed for its veracity and functionality in order to avoid constraints of quantity vs quality.
See: Data is a 2-way street in a post-GDPR world
Fintechs need personalisation
Traditional banks will slowly go out of business. Innovative FinTech companies want to deliver personalised and cost-effective finance products. In order to do so, they need to utilize enormous numbers of data from various touch-points.
The old approach to customer segmentation, meaning dividing customers into groups based on data related to demographics, geography, economic status as well as behavioural patterns, can be enhanced with Big Data algorithms that introduce relevance-drivers. They play a crucial role in determining the minimal overlap across segments and minimal separation within the segments.
Big Data and ML applications enable businesses to get to know customers on a more granular level by providing better analytics and forecasting. Personalisation is already gaining grounds in insurance services. The more of data insurers have on their customers, the more they can adjust their premiums accordingly. Data-driven insights can also further confirm data analysts’ intuition and reduce human errors when developing a risk profile of customers requesting financing or underwriting and credit-scoring in loan management. The massive growth and availability of real-time data also improves the accuracy of marketing and devise customer retention/loyalty programmes.
See: Differences Between AI and Machine Learning and Why it Matters
FinTechs need automation
Financial companies need to harness big data to aid in processes like trading, risk or fraud. Computer algorithms are able to learn and adapt to real-time changes and conduct trades autonomously. With machine learning systems can automatically learn and improve to identify risks better and to anticipate and avoid them. Every FinTech company wants the trading algorithms that outperform those of their competitors. Supervised machine learning gives higher accuracy than any other mathematical models and enables trading decision based on more than stock information, way better than those with the human involved.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Social equity must be central to urban tech innovations
FastCompany | Alex Ryan | Nov 26, 2019
The lesson to learn from so many tech efforts that have drawn protest: social equity must become central to every project that taps data-hungry tech to deliver citizen services.
Sidewalk Labs, the urban innovation arm of Alphabet, had grand ambitions to create a prototype smart city in Toronto, filled with a smart power grid, underground tunnels for freight, and countless other shiny innovations. But the project was significantly scaled back as concerns about tech’s ethics and use of personal data have become more prominent, and because of how Sidewalk Labs has interacted with the city itself.
The saga shows that companies entering new markets without consulting local communities open themselves up to severe risks. Failure to bring the public into public innovation immediately surfaces the possibility of citizen activism that impacts profits and project timelines, the development of local regulations that aim to curb specific business models in question, and the exposure of practices that vault companies into the public spotlight. If you have any doubts, just look at the turbulent rise of Uber (and ridesharing, in general), the retreat of Amazon from Queens, and the sharp decline of WeWork. Social equity must become central to every project that taps data-hungry tech to deliver citizen services, address critical local issues, rethink infrastructure, and improve the quality of life in a place.
See: While Canada debates, others are commercializing our most valuable asset: data
Citizens must have a leading role in innovation planning
Innovation can drive inequality. Entire demographics can be left behind—or specifically targeted—when physical technologies, mobile apps, and digital platforms roll out to address urban issues from transit congestion to climate change to criminal justice. Further, governments and private industry stakeholders often introduce innovations to local communities without bringing previously marginalized communities into the fold, by accident or by design. That practice needs to end.
That said, there are some positive examples from cities around the world looking to use tech for good. In Barcelona and Amsterdam, the DECODE project provides tools that put individuals in control of whether they keep their personal data private or share it for the public good. In London, the Open Data Institute and the city have partnered to create solutions to civic challenges, while maintaining the privacy and security of Londoners. Unfortunately, these are more the exception than the norm. More cities that want to embrace innovation must take people into account from the beginning.
Governments need to deepen tech literacy and invest in data governance capacity
Big Tech’s efforts to drive innovation at the local level often masquerade as noble promises to improve the status quo. Companies like Amazon, Uber, and Sidewalk Labs introduce full-scale civic projects that aim to put autonomous vehicles on the streets, overhaul transit options, deliver flexible architecture, and engineer outdoor microclimates. High-speed networks, futuristic algorithms, and a vast array of sensors power their local advances, often without consent from local leaders and communities. Consequently, municipal governments still find themselves rethinking everything from regulatory oversight to public realm data privacy to the complex dynamics of public-private infrastructure projects in response to Big Tech movements, instead of in concert with them.
See: How Data-driven Strategies Can Improve Impact Investing Outcomes
At the same time, public sector leaders around the world still have plenty more work to do to hold tech companies—and themselves—accountable for responsible practices that ensure data transparency and security. Officials in charge of innovation-focused regulation and oversight must embrace diversity of people, cultures, and perspectives in order to make cities welcoming places powered by ethical technology. They must expand the number of voices at the table in order to properly address local issues, like public transportation and economic disparity, that divide people within communities. That process begins with taking steps to educate current leaders and staff about the importance of strong data governance, opening clear lines of communication with local communities, and allocating budget toward hiring top technology talent with both the moral compass and technical knowhow to go toe-to-toe with private sector actors. This is what Toronto has learned from the Sidewalk experiment.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Even Facebook’s Libra can’t escape the fintech establishment
FastCompany | Howard Yu and Jialu Shan | Nov 6, 2019
Despite Facebook’s reach, IMD professor Howard Yu and research fellow Jialu Shan break down how its Libra digital currency is no match for legacy financial institutions.
To understand the impact of Visa’s and Mastercard’s withdrawal to Libra is to understand their enormous influence in fintech innovation in the Western world. At the International Institute for Management Development (IMD), we track how likely a firm is to successfully leap toward a new knowledge frontier in its effort to prepare for the future. We specifically measure how ready the industry incumbents in the financial sectors are for new areas such as robo-advisers, cryptocurrency and blockchain, artificial intelligence, mobile services and mobile payments, and application programming interfaces (APIs).
To achieve a balanced and robust measurement, we take note of the “health” of a company’s ongoing business through its cash flow, operating margins, and rising revenues. But for that healthy cash flow to be effectively deployed into new areas, executives need to see beyond their day-to-day operations and be capable of challenging the long-held assumptions of the industry. This process demands diversity in a company’s workforce, which is represented by gender and nationality as well as the specific backgrounds of the top leadership. We then measure the company’s growth prospects as gauged by investors’ expectations, investment in startups or new ventures, and, perhaps most importantly, its new product announcements.
See: Sibos London 2019: Banks that fail to embrace APIs ‘face existential threat’
The result is an index, which unsurprisingly includes a few household names among fintech developers. PayPal, a digital payments firm that turns 20 this year, and Square, which processes credit card payments everywhere from street stalls to coffee stands to fancy farmers’ markets, are both sitting at the top of the rankings. And yet, several incumbents have managed to grow just as fast. They are the legacy infrastructure builders: Visa and Mastercard.
Since the dawn of the smartphone era, countless new entrants providing payment methods—Apple Pay, Google Wallet, Square, PayPal, Vimeo, and Revolut, to name just a few—have all proven themselves powerful innovators that can design offerings that consumers crave. They have carved out segments of the market away from the credit cards that traditional retail banks issue.
In the face of these changes, the only proven strategy Visa and Mastercard can rely on in order to maintain the relevance of their legacy infrastructure is to bypass their own plastic, deemphasizing and destroying the very physical embodiment of their products, which was cherished for decades, and allowing these disrupters to connect to their toll road. If you can’t beat them, let them join you.
It should come as no surprise that when the Apple card was announced, commentators noticed that, in addition to promised breakthrough features, its logo shared space with Goldman Sachs—the underwriter—and Mastercard. Not even Apple can shake off the plastic network.
And it’s not just Apple. PayPal, Square, Samsung Pay, Google Pay, Facebook Credits, Stripe, and even cryptocurrency startup Coinbase, all work with Visa and Mastercard. In other words, no fintech company can disrupt anyone unless they pay a toll to the old boys’ network.
The reason is simple. An interface standard has emerged that has made Visa and Mastercard so simple and powerful to work with that their vast networks are irresistible for any fintech: APIs.
See: Lack of open banking framework forcing Canadian consumers to choose between convenience and security, TD exec says
An API is an official set of rules and guidelines that facilitates the exchange of information between two pieces of software. These software routines, protocols, and tools can allow third parties to tap into Visa and Mastercard’s infrastructure. “While many legacy bank players have been hesitant to see Visa as primarily a technology company,” observed Gilles Ubaghs, senior analyst of financial services technology at Ovum, “the recent launch of Visa’s developer platform, . . . with a host of APIs offering a full mix of payment functionality, all built on Visa’s underlying core network, [shows that] Visa is opening up its full capabilities directly to the broader digital ecosystem.”
The major breakthrough here, then, is the realization that a product’s best feature will never be invented in-house. Visa and Mastercard realize that killer apps will be invented by third parties, who are closer to the customers than the credit card giants. Whenever a third-party application becomes significant enough, the system co-opts it in order to remain flexible, all the while setting new standards for the industry. There may come a day when credit cards themselves disappear, but Visa and Mastercard can still be ubiquitous, still making all the hard parts of sending and receiving money around the world look easy.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Where top VCs are investing in fintech?
TechCrunch | Arman Tabatabai | Nov 6, 2019
Over the past several years, ‘fintech’ has quietly become the unsung darling of venture.
A rapidly swelling pool of new startups is taking aim at the large incumbent institutions, complex processes and outdated unfriendly interfaces that mar billion dollar financial services verticals, such as insurtech, consumer lending, personal finance, or otherwise.
In just the past summer, the startup community saw a multitude of hundred-million dollar fintech fundraises. In 2018, fintech companies were the source of close to 1,300 venture deals worth over $15 billion in North America and Europe alone according to data from Pitchbook. Over the same period, KPMG estimates that over $52 billion in investment pour into fintech initiatives globally.
See: How to Value a Fintech Startup
With the non-stop stream of venture capital flowing into the never-ending list of spaces that fall under the ‘fintech’ umbrella, we asked 12 leading fintech VCs who work at firms that span early to growth stages to share where they see the most opportunity and how they see the market evolving over the long-term.
The participants touched on a number of key trends in the space, including rapid innovation in fintech infrastructure, fintech companies embedding themselves in specific verticals and platforms, rebundling and unbundling of financial services offerings, the rise of challenger banks and the state of fintech valuations into 2020.
Charles Birnbaum, Partner, Bessemer Venture Partners
The great ‘rebundling’ of fintech innovation is in full swing. The emerging consumer leaders in fintech — Chime, SoFi, Robinhood, Credit Karma, and Bessemer portfolio company Betterment — are moving quickly to increase their share of wallet with their valuable customers and become a one-stop-shop for people’s financial lives.
In 2020, we anticipate continued entrepreneurial activity and investor enthusiasm around the infrastructure and middleware layers within the fintech ecosystem that are enabling further rebundling and a rapid convergence of product themes and business models across the consumer fintech landscape.
Many players now look like potential challenger bank models more akin to what we have seen unfold in Europe the past few years. Within consumer fintech, we at Bessemer are more focused on demographically-specific product offerings that tap into underserved themes, whether that be the financial problems facing the aging population in the US or new models to serve the underbanked or underserved population of consumers and small businesses.
See:
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[Report] A New North Star: Canadian Competitiveness in an Intangibles Economy
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10 Key Issues For Fintech Startup Companies
Ian Sigalow, Co-founder & Partner, Greycroft
What trends are you most excited in fintech from an investing perspective?
I suspect that many enterprise software companies become fintech companies over time — collecting payments on behalf of customers and growing revenues as your customers grow. We have seen this trend in many industries over the past few years.
Business owners generally prefer a model that moves IT expenditures from Operating Expenses into Cost of Goods Sold, because they can increase prices and pass their entire budget onto the customer.
On the consumer side, we have already made investments in branchless banking, insurance (auto, home, health, workers comp), cross-border payments, alternative investments, loyalty cards/services, and roboadvisor services. The companies we funded are already a few years old, and I think we will have some interesting follow-on activity there over the next few years. We have been picking spots where we think we have an unfair competitive advantage.
Our fintech portfolio is also more global than other sectors we invest in. This is because there are opportunities to achieve billion dollar outcomes in fintech, even in countries that are much smaller than the United States. That is not true in many other sectors.
We have also seen trends emerge in the US and move abroad. As an example we seeded Flutterwave, which is similar to Stripe, and they have expanded across Africa. We were also the lead investor in Yeahka, which is similar to Square in China. These products are heavily localized —tin for instance Yeahka is the largest processor of QR code payments in the world, but QR code payments are not popular in the US yet.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Lack of open banking framework forcing Canadian consumers to choose between convenience and security, TD exec says
Financial Post | Geoff Zochodne | Nov 5, 2019
Open banking is already happening in the market and regulators need to catch up
A lack of action on open banking could be forcing Canadian consumers to choose between convenience and security when it comes to third-party financial service providers, according to the chief digital officer of one of the country’s biggest banks.
“For me, there’s a problem,” Rizwan Khalfan, Toronto-Dominion Bank’s chief digital and payments officer, told the Financial Post at the bank’s technology day last week. “That’s an unfair trade-off.”
So-called open banking is a framework that would allow consumers and businesses to let third-party companies access their financial transaction data via secure online channels known as application programming interfaces (API). This could allow companies to design products and services with the data, as well as possibly enable easier account-switching.
Ottawa has been weighing an open-banking framework since 2018, but has yet to release the results of a consultation process launched in January.
In the meantime, the financial technology industry has been developing quickly, and apps that use “screen scraping” — a process whereby customers hand over their login credentials to a third party which then retrieves their financial information — have grown in popularity. This process can violate the terms and conditions of a bank account and could lead to increased risk of identity theft and cyberattack, according to a Senate of Canada committee report.
Khalfan called this an “emerging problem” in Canada that must be solved.
See: Open banking has a big branding problem, government’s public opinion research suggests
TD is proposing the government pursue an open banking model that is along the lines of the industry-led model in the United States, where TD already has the necessary technology in place.
“We’ve built out our APIs and we’ve actually gone live with them in the U.S. in the last month,” Khalfan told the Post. “Because we are North American, we leverage our investments on both sides of the border, so we are planning to use the same API gateways in Canada.”
Khalfan expects a third-party certification process in Canada, but TD is proposing an independent assessment organization that would be overseen but not run by regulators. Everyone in the open-banking “ecosystem” would have to follow industry standards, which would be encouraged by regulators.
“There’s enough industry data standards available that we can actually leverage one of them and then tailor it to our needs in Canada,” Khalfan said.
He also said they are working with regulators and financial-technology firms, and added sorting out standards could be done “in months.”
“An industry-led solution has the potential to be a lot faster,” Khalfan said.
An alternative to TD’s vision is the model that has been implemented in the United Kingdom, where a regulator found bigger banks did not have to compete all that hard for business, which left consumers paying more for their services.
Open banking was part of the recommended solution, and the U.K.’s biggest banks were mandated to make personal and small business account data available to third parties via APIs. Standards were set by the bank-funded Open Banking Implementation Entity and the Financial Conduct Authority approves third parties.
By contrast, TD’s proposal would see a customer engage with a third party provider or app, which would then — usually via an aggregator — send a request to the bank for the consumer data. The bank would ask the customer if they consent to sharing the data, Khalfan said. If so, the data would be sent through industry-standardized APIs.
See: Open Banking Era Starts in Australia (Feb 2020)
Khalfan’s concerns appear to echo feedback the government received in meetings with around 200 stakeholders earlier this year, as detailed in documents obtained by the Post following an access-to-information request.
“An area of consensus among stakeholders is that elements of open banking are already happening in the market and there needs to be consideration of how this activity is managed,”
says a memo sent to an associate deputy finance minister ahead of a March meeting with the lead of Australia’s open banking review.
“Stakeholders are not of the view that the status quo (redacted) is tenable or desirable,” it says.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Lone Bitcoin Whale Likely Fueled 2017 Price Surge, Study Says
(Bloomberg) -- A Texas academic created a stir last year by alleging that Bitcoin’s astronomical surge in 2017 was probably triggered by manipulation. He’s now doubling down with a striking new claim: a single market whale was likely behind the misconduct, seemingly with the power to move prices at will.
One entity on the cryptocurrency exchange Bitfinex appears capable of sending the price of Bitcoin higher when it falls below certain thresholds, according to University of Texas Professor John Griffin and Ohio State University’s Amin Shams. Griffin and Shams, who have updated a paper they first published in 2018, say the transactions rely on Tether, a widely used digital token that is meant to hold its value at $1.
“Our results suggest instead of thousands of investors moving the price of Bitcoin, it’s just one large one,” Griffin said in an interview. “Years from now, people will be surprised to learn investors handed over billions to people they didn’t know and who faced little oversight.”
Tether rejected the claims, with General Counsel Stuart Hoegner arguing in a statement that the paper is “foundationally flawed” because it is based on an insufficient data set. The research was probably published to back a “parasitic lawsuit,” the general counsel added.
See: Regular investors are cut out of a major financial market and the SEC chief wants to change that
Bitfinex and Tether aren’t new to controversy. The exchange is owned and operated by the same executives who control Tether, and multiple traders have questioned a key assertion about the coins -- that each one is backed by one U.S. dollar. The tangled web has attracted scrutiny from the U.S. Justice Department and New York’s attorney general, who accused Bitfinex in an April lawsuit of trying to hide the loss of hundreds of millions in customer funds.
Griffin and Shams’s hypothesis that Bitcoin was manipulated is based partly on the theory that new Tethers are created without the dollars to back them and then used to buy Bitcoin, leading to rising prices. The authors examined Tether and Bitcoin transactions from March 1, 2017 to March 31, 2018, concluding that Bitcoin purchases on Bitfinex increased whenever Bitcoin’s value fell by certain increments. Griffin and Shams didn’t name the entity on Bitfinex that they think was responsible. They shared their updated research with Bloomberg News.
“This pattern is only present in periods following printing of Tether, driven by a single large account holder, and not observed by other exchanges,” they wrote in their new peer-reviewed paper, set to be published in a forthcoming Journal of Finance.
“Simulations show that these patterns are highly unlikely to be due to chance. This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on Bitcoin that is not observed in aggregate flows from other smaller traders.”
‘Money Grab’
In his statement, Tether’s Hoegner was adamant that the allegations laid out in the paper have no merit.
“This is a transparent attempt to use the semblance of academia for a mercenary money grab,” Hoegner said. “Updates or not, the paper lacks academic rigor.”
He added that “macroeconomic experts and stakeholders in the cryptocurrency ecosystem understand that it is the global rise of digital currency that has driven the markets and demand for Tether.”
See: Investors, ‘starved for returns,’ flood private markets in search of high-growth opportunities
Both Bitfinex and Tether received subpoenas in 2017 from the U.S. Commodity Futures Trading Commission, Bloomberg reported at the time. The Justice Department has since opened a criminal investigation into whether Tether was being used to manipulate Bitcoin. Neither the CFTC nor federal U.S. prosecutors have accused Bitfinex or Tether of any wrongdoing.
$850 Million
In her lawsuit, New York Attorney General Letitia James said Tether and Bitfinex executives participated in a cover-up after about $850 million in client and corporate funds allegedly went missing. Bitfinex has said that James’ suit is riddled with erroneous assertions.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Fintechs must ‘sell simplicity’ to carve out competitive advantage
Finextra | Oct 25, 2019
Where selling trust with a brand was once the key point of distinction for effective marketing in the fintech space, streamlining user experience through product simplicity now leads the way in superior branding strategy.
With Money2020 set to launch in Las Vegas on Sunday, Finextra spoke with UK challenger Starling Bank, which this week announced a further £30m raise in funding to firm up its B2B offering and prepare for European expansion.
Head of banking at Starling Bank, Helen Bierton, says: “today’s consumers have grown used to a world of digital services that are crafted around their individual needs, providing them with input before, during and after they buy those trainers or a search for a loan.
“They expect offers and recommendations based on their own and others’ location, demographics and past and present purchases and behaviour. And they want these insights to be delivered and updated instantly to their smartphones.”
Where incumbents lack the agility to recognise and deliver the new product strategy in line with change in customer expectations, challenger banks are prepared and able to capitalise on the opportunity.
See: How AI may help solve banks’ customer relationship issues
Bierton elaborates: “Because we have built our own platform and proprietary infrastructure and because we work in an agile manner updating our software continually, we can be very responsive to customer needs.
“We do not have expensive-to-maintain legacy IT or branch network and our cost base is a fraction of the big banks’. We therefore have a very clear path to profitability.”
Philip Davies, president of EMEA, Siegel + Gale, says that while we’re seeing a trend of increased customer expectations across all industries, “brands are facing the prospect of having to offer more for less, and often for free."
Davies explores this shift in focus and what it means for fintechs vying for market share: “Some are suggesting that retail financial institutions should consider moving into a subscription or membership-based model. Time will tell whether or not this is feasible.”
The introduction of open banking provided fintechs with a wealth of information which allowed them to position themselves tactically against the incumbents, highlighting and exacerbating pressure points in the digital transformation process.
Davies explains that Siegel + Gale, a brand consulting firm, “finds that this is presenting a brand issue for larger businesses where they need to consider expanding and offering clients everything within one platform, even if some of those services are not profitable.
“[However] while open banking may be forcing the larger brands into shifting investment priorities, open banking or not, if you’re not keeping the consumer front-of-mind, you risk being disrupted.”
Davies argues that the selling-point of trust has played a significant role in what is now a minimum requirement of fintech branding strategy: “Every fintech will know that if you’re not showing that you can be trusted in such a sensitive and compliance-heavy space, then you’re starting at the back of the pack.”
See: 3 Challenges of Scaling a Fintech Company Across Borders
The point of differentiation now comes down to simplicity of product - and ensuring that value point is translated in branding. Identifying and addressing this concept is the area most ripe for profit.
“Often fintech solutions are an iteration of an existing product offered by a large incumbent, but the difference is that a fintech startup will likely have taken that product and developed a deep understanding of the consumer needs.
“If you look at the TransferWise story, it’s two people that wanted a best-in-class customer experience when transferring money, but were faced with many painpoints, so fintech simply removed them,” Davies explains.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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