SlideShare una empresa de Scribd logo
1 de 40
Descargar para leer sin conexión
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
presents
&
FinTech Outlook
for 2017
Trends, Opportunities
& Challenges
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
2
Objectives of the Report
SynopsisA
3
A Primer: The Current State of the FS Industry and Key Segments
Which Constellation?: The Emerging Technology and Market Forces
Snapshot of 2017
Incumbents and Startups: Opportunities & Challenges
A Game Theory View of Winners and the Residual Forces of Cooperation
Takeaways
B
5
C
13
D
17
F
32
G
37
E
26
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
3
Synopsis
A
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
4
This paper is intended for readers who want to better understand the dramatic changes that have begun to take place—and that are
accelerating—in the global FinTech landscape. The payments industry which is one of the focus areas of this report has never been
more exciting. The pace of innovation has been shaken the banks (although not dramatically as some media claims), but they have
realized that they need to keep the customer at the center as they go forward and meet her/his needs first. This would also mean that
the infrastructure supporting the payments industry—which has never been touched upon—has to be transformed. FinTech players
have also given an opportunity to banks to venture where it was prohibitively costly to venture. With the trust of customers and data
available, the banks can take advantage of FinTech disruption and convert it to an opportunity either through collaboration and/or
through becoming very customer-focused or recalibrating their business models.
• Payments
The payments industry would be in a transformational state in 2017. The ongoing war with alternate payment
channels will intensify and challenges in emerging markets would force the incumbents to take drastic
measures. Some key drivers would be:
– Real-Time Payments: RTP represents a new phase of evolution within the payments industry, with several key features that
differentiate them from current payment methods, specifically speed, value-added messaging capabilities and immediate
availability of transaction status. RTP will provide FIs with the functionality/features to innovate and meet customer demand.
– Blockchain: Blockchain has the potential to completely change the financial transaction processing cost model amongst its
various applications. It also enables all processing to be done over a distributed system network or in the cloud avoiding the
usage of costly datacenters or mainframes.
• Remittances
Cross-border payments have become a critical part of millions of lives as we have become a more globalized
world. As cross-border payments have become more common, customers of remittance products/solutions are
looking for the most convenient, cost-efficient and transparent options. Digital and mobile-based solutions, new
cost-efficient models in the back-end and even the use of virtual currencies is being tried out by providers.
FinTech Outlook Report – Focus on Payments, Remittance and Blockchain
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
5
Current State of the FS Industry and Key Segments:
Payments, Remittance and Leading Drivers (e.g. Blockchain)
Primer
B
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
6
Current State of Payments – 2016
• Year 2016 is a special one in the payments world where credit card payments have overtaken the cash payments for
the first time.
• And we all know that global non-cash transaction volumes have been growing at 8% to 9% every year.
• In 2015, global payments revenue was $1.16 trillion, representing 29% of banking revenues. The growth engines are
transaction-related revenue (around 40%) and account-related (around 34%).
• Key drivers for the revenue are movement from cash to e-payments and broader financial Inclusion.
Mature and Emerging
economies are moving
at faster rates fueled by
the regulatory
environment, economic
and population growth,
migration from cash to
non-cash and rise in
financial inclusion.
With growing non-cash
transaction, alternative
payments are estimated to
account for 59% of all
transaction methods by 2017.
Alipay and PayPal continue
to dominate globally as the
most prevalent e-wallet
types.
Emergence of specialized
mobile payment solutions
are growing with technology
advances and rising
smartphone penetration.
The value of mobile
transactions are expected to
reach $117 billion by 2017.
Within 10 years, the
revenue from APAC
(Emerging) will surpass
North America.
Western Europe is
expected to fall while
Latin America will gain.
$$
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
7
• Innovation in open loop, closed loop and integrated payment apps are augmenting customer and merchant experience.
• Payment processing transformation acting as a key to meet the next-generation payment methods.
• Emerging economies are witnessing disruptive growth in financial services.
• Growth of RTP across the globe is providing FIs with the functionality and features to innovate for the future.
• Digitization of payments lies at the top of agenda for all market players. End-to-end customer experience that maximizes security,
reduces complexity and provides a compelling value add would be the winner.
Developments in the Payments Space
• The Apple, Android and Samsung
Pay eligible/user populations are
becoming more mainstream.
• Merchants are realizing that
mobile pay acceptance is a driver
to merchant selection whether
users are shopping in-store, in-
app or on the web.
• Contactless spending is expected
to continue to increase in a
number of markets.
• Contactless ticketing adoption in
2016 will be driven by the
following key markets; Asia
(including Japan, China, Hong
Kong and Taiwan), Russia,
France, Spain, the Netherlands
and Italy.
• This is expected to give NFC
ticketing a similar boost to that of
the retail sector.
• Emerging as threat to the
traditional issuers.
• Consumers adopt mobile
commerce experiences, not just
another payment type.
• Visa and Mastercard are creating
easy on-ramps for issuer wallets.
Alternate Payments Mobile Wallets
Contactless
Payments on the Rise
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
8
Current State of Real-Time Payments – 2016
• There are currently 18 countries ‘live’ with RTP systems, 12 countries that are ‘exploring/planning/building,’ and an
additional block of 17 countries that are ‘exploring’ through a pan-Eurozone initiative.
• ISO 20022 is seen as a way to improve payments efficiency, to create a common, level playing field.
• In the United States, the Federal Reserve Board has called for the implementation of “a safe, ubiquitous, faster payments
capability” and The Clearing House has announced that it will create a national RTP system.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
9
Current State of Remittance – 2016
• In 2015, worldwide remittance flows are
estimated to have exceeded $601 billion. Of
that amount, developing countries are
estimated to receive about $441 billion,
nearly three times the amount of official
development assistance. The true size of
remittances, including unrecorded flows
through formal and informal channels, is
believed to be significantly larger.
• High-income countries are the main source
of remittances. The United States is by far
the largest, with an estimated $56.3 billion
in recorded outflows in 2014. Saudi Arabia
ranks as the second largest, followed by the
Russia, Switzerland, Germany, the United
Arab Emirates and Kuwait. The six Gulf
Cooperation Council countries accounted
for $98 billion in outward remittance flows in
2014.
Remittances
• New online players have emerged and have
raised the bar in terms of customer
experience (digital/mobile channel) and
costs of remittance.
• Almost all major players successfully raised
new funding rounds in the past six months:
WorldRemit – $45M (total – $192,7M),
TransferWise – $26M (total – $117M),
Remitly – $38.5M (total – $61M), Azimo –
$15M (previous round – $20M).
• High scope for mergers as customer
acquisition is quite expensive.
• Social remittances hasn’t picked up except
WeChat.
Online Remittances
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
10
Current State of Remittance – 2016
Highly fragmented, with market growth attracting additional participants .
The incumbents… …niche players… …and innovators.
• Big cash-to-cash players wary of
cannibalization
• Look to retain end-to-end control of
the service
• Cherry-picking specific corridors
• Leveraging ethnic market loyalty
• Market share increasing rapidly
• Generating the biggest flows towards
mobile money services
Annual Remittance Market 2015: $582 Billion
Remittance Companies Powered by
Blockchain Technology
~ 85% Cash
~ 12% Bank
< 3% Other (mobile wallets, cards, etc.)
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
11
Current State of Blockchain – 2016
• Expected to be the future of financial infrastructure
and could lead to rewiring.
• Awareness of Distributed Ledger Technology (DLT)
has grown rapidly, but significant hurdles remain in
large-scale implementation.
• Digital identity is a critical enabler to broaden
applications to new verticals; digital fiat (legal
tender) has the ability to amplify benefits.
• Applications of DLT will differ by use case, each
leveraging technology in different ways.
Blockchain
Implementation of the blockchain technology as real business is curbed by the very benefit that if offers.
The technology is developed for mass adoption (with all stakeholders involved) and has no use without it.
• Most projects (a range of wallets and money transfers has
appeared over the last half-year) are in their experimental and
product adjustment stage and have a long way to go to influence
the market. There are a few projects (such as Everledger) which
could show scale but there is a need of many such projects.
• Rising of Etherium “The digital currency ether has been
generating substantial visibility, a development that could draw
attention – and trading activity – away from bitcoin.”
• R3 completes “biggest-ever” trial of blockchain solutions with 40
banks.
• Debate emerges over speed of blockchain adoption – will major
changes take place soon (e.g. within two years) or 5–10 years
away?
Areas of
Focus
Corporate
Bonds
Repos Swaps Insurance
System
Interoperability
Payments Settlement
Trade
Finance
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
12
Current State of Blockchain – 2016
DLT Activity
Global
Interest
Bank
Experimentation
Research Venture
Capital
Consortium
Efforts
Pilots
80% of banks predicted to
initiate DLT projects by 2017
Over US$ 1.4 Billion
in investments over the
past 3 years. VC
investment in blockchain
startups exceeds
bitcoin startup investment
for first time
2,500+ patents filed
over the last 3 years
24+ countries currently
investing in DLT
R3 completes “biggest-ever”
trial of blockchain solutions with 40
banks
Microsoft’s Azure Blockchain-
as-a-Service (BaaS) adds 21
new partners Hyperledger
Project grows to 40 members
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
13
The Emerging Technology and Market Forces
Constellation
C
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
14
Cloud
FinTech are major adopters of the cloud services. Apart from scalability
and cost benefits, cloud service providers also help FinTech startups
build compliant IT Infrastructures.
Omnichannel
Banks are looking to integrate their multiple digital channels into an
omnichannel customer experience and leverage their existing customer
relationships and scale.
APIs
The incorporation of application program interfaces (APIs) enables third
parties to develop value-added solutions and features that can easily be
integrated with bank platforms.
Big data, AI & Cognitive
The growth of digital universe across industries has led to the Big Data
revolution. Some of the areas in financial services that are seeing major
overhaul include credit scoring, customer acquisition and retention, risk
management, investment management.
Another growth segment has been cognitive sciences. The explosion of
data availability and lowering data storage costs has led to better
customer behavior models built utilizing machine learning, artificial
intelligence and natural language processing techniques.
IoT
The IoT focus for financial institutions has been on products. The most
important business process improvement is tailoring their products and
services for customers. From recognizing customers who step into a
branch, to customers who favor drive-through banking to pay for
products at places like restaurants and gas stations while in their car,
have all been possible with IoT technologies.
Omni
Channel
APIs
Big data, AI
&
Cognitive
IoT
Cloud
Technologies
Key Technologies Shaping FinTech
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
15
What's Next From a FinTech Perspective?
• API-based financial services are on the rise. In fact, APIs are the main reason that startups are able to build their products faster.
• Open APIs enable developers to build customized applications that cater to users across the board.
• As FinTech startups continue to benefit from open APIs, banks are also waking up to the fact that offering an open API is the way to
engage and retain their digital customers.
API Based
• The demand for wearables such as smartwatches and smart fitness wristbands has escalated substantially over the last few years.
• In fact, many financial institutions have displayed a deep interest in wearable technology.
• About 82% of financial professionals believe that smartwatches will facilitate financial transactions in the future! What’s more, 72% of
these professionals have wearable applications on their three-year road.
Wearables
• Twitter has proven to guide and help predict the stock market. Some examples of how tweets can move stock prices include 20%
plummeting of Twitter’s stock after disappointing quarterly earnings were tweeted ahead of their expected release. On the other
hand, Tesla’s shares jumped four percent when Elon Musk tweeted about a new product line.
• With around 85% of US equity trades being executed by algorithms, the trend of predictive analysis through social media is only
going to grow in 2016.
• Apart from equity trading, rising social media usage has led to better behaviour profiling of customers, personalization of offers,
security features based on users location, customer service management and other services being adapted by financial institutions.
Social Media
• Banks have recently begun to leverage technology to improve processes, customer experience and security.
• There has been a convergence of banking and FinTech, especially since both are evaluated on the same metrics by regulators, investors and
consumers.
• This trend will continue in 2016 as the difference between traditional banking and FinTech disruptors gets blurred.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
16
The threat of disintermediation in the payments industry is both real and imminent
• The world of payments remains in constant flux, reflecting an ongoing rebalancing of power among incumbent banks, digital
giants, financial technology (FinTech) startups, card networks, and of course, consumers and merchants.
• Driven by rapid advances and investments in digital payments offerings and capabilities, the global payments landscape is
undergoing a profound transformation.
By 2017, alternative
payments will account for
59% of all transaction
methods.
New payment players
defining frictionless user
experience.
Shift would have big
impact on sources of
revenues across market.
Two markets emerge:
Developed: Customer
convenience and front-end
innovation.
Emerging: Financial
inclusion and way to reach
customer innovation.
New Methods New Players Rev Impact Markets
Retail Payments/Remittance Future – Market Forces at Work
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
17
Snapshot of
2017
D
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
18
Share of Global Revenues in % Terms Is Going to Change Quite a Bit by 2024
28% 28% 28% 27% 24%
20% 21% 22% 22% 27%
16% 15% 14% 13% 11%
13% 14% 14% 14% 15%
10% 9% 9% 9% 8%
8% 9% 9% 9% 8%
3% 3% 3% 3% 4%
2% 2% 2% 2% 3%
2014 2015 2016 2017 2024
N. America APAC W. Europe Latin America
Asia Pacific E Europe Middle East & Africa RoW
2014 - 2017
World Wide
100%
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
19
Volume, Value and Total Revenue
145 153 163 173
273
307 320 337 354
478
2014 2015 2016 2017 2024
46 49 52 56
92
145 161 169 179
295
2014 2015 2016 2017 2024
32 34 36 38
58
87
98 104 112
168
2014 2015 2016 2017 2024
99 98 101 105 137
172 167 169 170
215
2014 2015 2016 2017 2024
40 45 50 55 109
221 236 262 291
543
2014 2015 2016 2017 2024
8 9 10 11 25
29 30 34 39
77
2014 2015 2016 2017 2024
432 453 481 512 811
1090 1145 1215 1293
1989
2014 2015 2016 2017 2024
9
10 11 12 22
23 26 28 31
57
2014 2015 2016 2017 2024
North America Eastern Europe Western Europe
Latin America Middle East & Africa Asia Pacific
World Wide Rest of the World
Value ($ Bn)Total Revenue ($ Bn)Volume (Bn)
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
20
Emerging Markets
Payments: 2017 Outlook
North America
• Credit cards continue to
generate bulk of revenue.
• Issuers to focus on digital
channels.
• Focus on m-wallets to ensure
engagement.
Europe
• Payment revenue under
pressure due to regulatory
framework.
• Focus on pricing models as
transaction fees are squeezed
and interest income on
accounts has shrunk due to
low interest rates.
Asia Pacific
• Clear winner.
• High margin cards source of
strong transaction revenue.
• Digital channels are key as
markets are value-conscious.
• Strong growth from emerging markets.
• Transaction revenues are a source of
growth.
• Strong government and industry initiatives
to move towards e-payments.
Developed Market
• Stable slow growth.
• Integrated payment applications are
augmenting customer and merchant
experience.
• In-app payments where the payment
mechanism is embedded in the mobile app.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
21
How Would 2017 Look Like for Blockchain?
• About 15% of banks and 14% of financial market institutions intend to implement full-scale, commercial blockchain solutions
in 2017.
• Faster than expect adoption of blockchain by banks.
We will likely see a number of
real-life applications of
blockchain applied to
payments, beyond digital
currencies, in the next five
years.
Private permissioned
blockchain-based systems will
gain significant transaction
volumes.
Digital currency will evolve and
be more accepted in the
mainstream. Most of the
countries would start looking at
having a digital currency of
their own.
IoT and digital payments will
ensure a more automated and
seamless retail customer
experience.
Transition to a blockchain-
dominant payment system will
depend mainly on
interoperability.
Direct payment flow between
two end points would be a
reality.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
22
How Would 2017 Look Like for Cross-Border Remittances?
Estimate and Projection for Remittance Flow to Developing Countries ($ Billions)
0
100
200
300
400
500
600
700
2015E 2016F 2017F 2018F
Regions 2015E 2016F 2017F 2018F
World 581.6 603.2 626.4 651.3
Developing Countries 431.6 447.9 465.7 484.7
East Asia and Pacific 127.0 131.0 135.5 140.3
Europe and Central Asia 34.6 36.3 38.3 40.3
Latin America and Caribbean 66.7 69.3 71.9 74.6
Middle East and North Africa 50.3 51.6 53.0 54.5
South Asia 117.9 123.3 129.3 135.8
Sub-Saharan Africa 35.2 36.4 37.7 39.1
Regions 2015E 2016F 2017F 2018F
World -1.7% 3.7% 3.8% 4.0%
Developing Countries 0.4% 3.8% 4.0% 4.1%
East Asia and Pacific 4.2% 3.2% 3.4% 3.6%
Europe and Central Asia -20.3% 5.1% 5.4% 5.2%
Latin America and Caribbean 4.8% 3.9% 3.8% 3.8%
Middle East and North Africa -0.9% 2.6% 2.7% 2.8%
South Asia 2.0% 4.6% 4.9% 5.1%
Sub-Saharan Africa 1.0% 3.4% 3.7% 3.7%
In $ Billions
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
2015E 2016F 2017F 2018F
In % Growth Rate
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
23
The growth rate of remittance flows to developing
countries is projected…
Cross-border remittance revenue…
The non-banks using proprietary networks….
High penetration of mobile banking and last mile
connectivity has led to surge of firms…
Remittances to developing countries are
expected …
How Would 2017 Look Like for Cross-Border Remittances?
to
RISE
to
RISE
will
INCREASE
have
CAPTURED
offering
LOW VALUE
Cross-Border
Remittances
Significant
Market Share
In All
Regions
4% a Year in
2016-17
4% a Year in
2016-17
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
24
How Would 2017 Look Like for Cross-Border Remittances?
• Existing business
model under
pressure from newer
business model.
• Decrease in
remittance fee.
• Global average fee is
expected to reduce to
7.52%.
• Uptick in overall
remittance growth.
• In 2015–16, the
remittance growth slowed
down owning to weak
economies and weaker
currencies.
• This trend is likely to
reverse due to US
recovery.
• Social media for money
transfer.
• Exploring social media
for money transfer.
• According to the World
Bank, 90% of money
transfers happens
between friends and
families.
$$
The titans (WU, Moneygram, likes) of the “cross-border money transfer” market, with a ~15%
worldwide market share, are being challenged by multiple well-capitalized upstart companies targeting
the
$582-billion remittance market.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
25
How Would 2017 Look Like for Real-Time Payments?
SWIFT announced a global initiative designed to use its existing global network of correspondent banks
to enable same-day payments between businesses anywhere in the world.
• The emergence of innovative real-time payment services is having a transformational impact on the underlying payment
systems.
• Interoperability and efficiency gains are key aspects for both FIs and regulators.
• Adoption of ISO 20022 would be a trigger point for faster adoption of real-time payments.
• Standardization and innovation is the key.
• Focus on speed and making it better.
• Non-bank network players such as Dwolla and Pop Money.
United States
Big banks in the US have a “growing sense of urgency that they are behind and getting. Testing for real-time
payments should go live toward late 2017. US real-time payments initiatives are ambitious and focused on
ubiquitous payments, with the top 24 US banks accounting for 60% of the industry. Of course, the real challenge is
reaching the entire financial ecosystem, which encompasses 14,000 financial institutions in the US.
Europe
The real-time payments services in the Single Euro Payments Area that was created by the European Payments
Council has goals to be in place on that timeframe.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
26
Incumbents
and Startups
E
Opportunities & Challenges
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
27
Key Opportunities for Startups
More than 20% of
FS business is at risk
to FinTechs by 2020.
FinTechs are
succeeding
where banks
have failed.
Disintermediation: FinTech’s most powerful weapon
Key Drivers: Radical shifts to client demographics, behaviors and
expectations.
Expectations: State-of-the-art customer experience, speed and
convenience will further accelerate the adoption of FinTech solutions.
Funding of FinTech startups
more than doubled in 2015
reaching $12.2bn, up from
$5.6bn in 2014.
Consumer banking and payments, already on
the disruption radar, will be the most exposed
in the near future, followed by insurance and
asset management.
Customer centricity is fueling disruption:
FinTech is riding the waves of disruption with solutions that can better
address customer needs by offering enhanced accessibility,
convenience and tailored products.
20%
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
28
Key Opportunities for Startups
Region Segment Total Market
FinTech Addressable
Potential
Examples
Global
Payments &
Remittance
$1.1 trillion (revenue)
$110 billion
(revenue) • Stripe has processed an
estimated $20 billion in
payments volume in 2015.
• Adyen & Braintree both
processed $50 billion each,
(payments volume in 2015).
• TransferWise: An estimated
$6.6 billion transferred in 2015.
United States
Consumer
Payments
Consumer
Remittance
$91.5 billion
(revenue)
$3.8 billion
(revenue)
$15.5 billion
(revenue)
$950 million
(revenue)
Global Asset/Wealth/
Investment
Management
$76 trillion (AUM) $2.5 trillion (AUM)
• Betterment $3.9 billion AUM
• Wealthfront $3 billion AUM
United States $30.1 trillion (AUM) $1 trillion (AUM)
Global Lending
$4.7 trillion
(loan origination)
$1.6 trillion
• Lending Club $15.9 billion
• OnDeck $1.9 billion
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
29
Key Opportunities for Incumbents (Banks)
Customer
Relationship1 |
Banks have been the
backbone of modern
economies since
their inception and
will continue to be
so well into the
future.
FinTech Need
Banks 2|
Banks have gone
through legal and
regulatory
compliance for
years. FinTech would
definitely to
collaborate with
banks.
Data and
Trust3 | Scale 4|
Banks have big data
— really big data.
The new
technologies would
enable banks to
reduce the cost of
operations and
innovate.
Banks’ sales force
and customer
service
infrastructure are
huge.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
30
Key Challenges Faced by Banks (US)
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
31
Key Challenges Faced by Startups
While FinTechs have been quick to move ahead on the technology innovation and customer relationship, they have huge
disadvantages in terms of retail presence (channels) and regulation/compliances. The other key handicap would be brand/trust
and data which is critical for scaling up.
Bank/FI Profile
Retail
Presence
Organizational
Knowledge of
Money Movement
Infrastructure
Loyalty/
Customer
Relationships
Regulatory
Infrastructure
including Legislative
Influence &
Compliance
Brand
Operational
Infrastructure
Technology
/UX/UI
Top 10
BofA, Wells, Citi
Regional
Banks
Suntrust, BB&T
Credit Unions/
Community
Banks
Online/ mobile
only Banks
CBW, MetaBank,
Ally Bank,
Synchrony
FinTech ? ?
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
32
Game Theory
F
A Game Theory View of Winners and the Residual Forces of Cooperation
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
33
Many banks are realizing that they need to act and are planning their future
actions to partner or compete with startups.
Innovation is at the top of the strategic agenda.
Winners (and WAR) or Coopetition (and Cooperation)
• A clear intent to innovate will be important. The sooner banks start working on improving experiences and the farther
they are ready to go, the winners and losers will be separated.
• Open Innovation and Open APIs are the underlying drivers for the next phase of growth that banks are set to
explore. This is seen as a natural step forward to embrace the growing need for co-development, reusability and
agile/rapid application development requirements.
• The rhetoric around FinTech disrupting the banks is tapering down and giving way to discussion around cooperation and
partnerships.
Banks and FinTechs
are working
together now.
Consumer Behavior and Technology Drivers are forcing banks
to innovate and close the gaps.
The FinTech threat is very real. The most profitable services for
banks such as lending/loans are being targeted and mainstream
customers are opting for new experiences.
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
34
Internal
Incubator
Strategic alliances with FinTech players:
The goal is to explore new business
opportunities, technologies and to share
knowledge.
Designing, developing and applying internal
initiatives with the collaboration of 'intern'
entrepreneurs or developing projects in
conjunction with strategic partners.
A few banks have reinforced their capacities
and expertise in design, big data and user
experience through the acquisition of innovative
business models such as Simple, Atom,
Holvi or SpringStudio.
Strategic
Alliances
Digital M&A and
Direct Investments
What are the ways for Co-operation
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
35
Game Theory Approach for Banks & FinTech Startups — Win for All
• Innovation loss
• Longer GTM timelines
• Legacy overrule
• Siloed efforts
• More investments
• Innovation loss
• No result competition
Compete
• Service accessorization
• Industry innovation
• Win-Win model
• Legacy & innovation alignment
• Shorter GTM
• One sided innovation model
• Un- sustainable
• Industry distrust
• Distress industry consolidation
Collaborate
Banks
FinTechStartups
CompeteCollaborate
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
36
Working Together
Co-Exist
Compete
Finding Niche
Startups like Lending Club and Square are
growing into billion-dollar businesses overnight,
and they have the potential to become mini-
banks in their specialized areas within the next
five years. These new companies are
attempting to scale their core businesses with
other diversified offerings. Venmo, for example,
is a free digital wallet that has opened the door
for merchants to use their credit facilities.
Creating Capabilities
BNY Mellon and several other banks are
working with the digital payments company
Early Warning® to automate business-to-
consumer (B2C) payments without requiring
their business customers to store and maintain
consumer banking information (e.g., transit
routing and account numbers). Banks can offer
this solution to their business clients who need
to make payments to consumers who hold US
bank accounts.
London-based TransferWise, the
money transfer firm valued at $1
billion, has integrated its service into
the smartphone app for LVH,
Estonia's largest bank.
BBVA Compass teamed up with the
online investment company
FutureAdvisor, with the hopes of
reaching a new segment of customers
with an appetite for lower-cost
automated advice. Again, this kind of
tiered offering – robo-algorithms,
supplemented with personalized
human guidance at a higher price
depending on customer requirements
– is intended to expand and enhance,
rather than replace, banks’ current
services.
Collaborate
Examples
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
37
Takeaways
G
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
38
• We are seeing almost a perfect storm for technology-
and experience-driven consolidation and/or atrophy
over the next decade, as opposed to macro-
economic/financials-driven structural changes.
• Over the next 5–10 years, the financial services
delivery will not remain with the incumbents and
FinTech players of today. Enabled by open APIs,
commerce players, brands and others would be able
to accept payments and disburse loans using bank
APIs directly.
Takeaways…
Takeaways
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
39
Almost every FinTech startup wants to disrupt the big
banks, but the problem is that it isn’t a fair fight. The US
banking sector (and globally) is so entrenched and
protected that challenging it from the outside is an
exercise in futility. The smart startups know this and will
use it to their advantage. In this coming of FinTech 3.0,
FinTech startups will partner.
FinTech 2.0 based innovation
starts when incumbent players in
the market were trying to leverage
their considerable resources to
remain competitive amongst
startups. Everyone from American
Express to Bank of America now
have “innovation centers” where
they try to foster the startup
mentality while leveraging their
established brands and
infrastructure.
The challenge, of course, is that
no matter how hard they try,
incumbents can never match the
agility and risk appetite of
startups. Corporate politics,
changing strategies, and an
overwhelming desire to protect the
brand serve as hindrances to
innovation.
At the end of 2008 financial crisis,
new regulations and changing
consumer demands began to
emerge as the world tried to pick
up the pieces of the “great
recession.”
These changes made certain
lines of business significantly less
profitable for banks and other
financial institutions, creating an
opening for tech-enabled startups
and brought up FinTech 1.0 to
step in and fill the void. This
coupled with the changing
demands of consumers and the
democratization of big data, led to
a FinTech renaissance of sorts.
1.0
FinTech
2.0
FinTech
3.0
FinTech
FinTech 1.0 to 3.0 ..
© Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited
Thank you.
LET’S TALK PAYMENTS, LLC
PO Box 473944
Charlotte, NC 28247, USA
Phone: +1 (202) 552-5998
follow@letstalkpayments.com
OPUS CONSULTING SOLUTIONS INC.
1300 E Woodfield Rd, Suite 308
Schaumburg, IL 60173, USA
Phone: +1 (630) 635-2933
marketing@opusconsulting.com

Más contenido relacionado

La actualidad más candente

FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...
FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...
FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...South Asia Fast Track
 
[Fintech in Asia] E-payments - Marvelstone Tech at SGX event
[Fintech in Asia] E-payments - Marvelstone Tech at SGX event[Fintech in Asia] E-payments - Marvelstone Tech at SGX event
[Fintech in Asia] E-payments - Marvelstone Tech at SGX eventJoe Seunghyun Cho
 
FinTech Research Global & Future of FinTech
FinTech Research Global & Future of FinTechFinTech Research Global & Future of FinTech
FinTech Research Global & Future of FinTechSaba Fatima
 
Beyond Banking: New Business Models for the Digital Era
Beyond Banking: New Business Models for the Digital EraBeyond Banking: New Business Models for the Digital Era
Beyond Banking: New Business Models for the Digital EraJessica Wilkinson
 
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...Luis Castejon-Martin
 
Fintech Overview - Bekkozha Muslimov
Fintech Overview - Bekkozha MuslimovFintech Overview - Bekkozha Muslimov
Fintech Overview - Bekkozha MuslimovBekkozha Muslimov
 
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...FinTechAkademia
 
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)iTrain
 
Ghana's Fintech Landscape: Trends & Opportunities
Ghana's Fintech Landscape: Trends & Opportunities Ghana's Fintech Landscape: Trends & Opportunities
Ghana's Fintech Landscape: Trends & Opportunities Paul Damalie
 
Research paper in fintech
Research paper in fintechResearch paper in fintech
Research paper in fintechSaloniAgrawal35
 
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...FinTech Consortium
 
Oppurtunities for Fintech in India
Oppurtunities for Fintech in IndiaOppurtunities for Fintech in India
Oppurtunities for Fintech in IndiaFintech Nxt
 
Wharton FinTech - Launching a FinTech Venture
Wharton FinTech - Launching a FinTech VentureWharton FinTech - Launching a FinTech Venture
Wharton FinTech - Launching a FinTech Venturewhartonfintech
 
Sector Study of Financial Technology in the Philippines
Sector Study of Financial Technology in the PhilippinesSector Study of Financial Technology in the Philippines
Sector Study of Financial Technology in the PhilippinesMaurice Gonzales, MTM
 
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016Mercer Capital's Value Focus: FinTech Industry | Second Half 2016
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016Mercer Capital
 
Making Hong Kong a #FinTech centre
Making Hong Kong a #FinTech centreMaking Hong Kong a #FinTech centre
Making Hong Kong a #FinTech centreCFTE
 

La actualidad más candente (20)

FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...
FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...
FINTECH: The Gamechanger - All India Management Association - www.sourajitaiy...
 
[Fintech in Asia] E-payments - Marvelstone Tech at SGX event
[Fintech in Asia] E-payments - Marvelstone Tech at SGX event[Fintech in Asia] E-payments - Marvelstone Tech at SGX event
[Fintech in Asia] E-payments - Marvelstone Tech at SGX event
 
FinTech Research Global & Future of FinTech
FinTech Research Global & Future of FinTechFinTech Research Global & Future of FinTech
FinTech Research Global & Future of FinTech
 
Beyond Banking: New Business Models for the Digital Era
Beyond Banking: New Business Models for the Digital EraBeyond Banking: New Business Models for the Digital Era
Beyond Banking: New Business Models for the Digital Era
 
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...
Fintech Strategic Roadmap for the UK’s Largest Banks: our MIT Fintech course ...
 
Fintech Overview - Bekkozha Muslimov
Fintech Overview - Bekkozha MuslimovFintech Overview - Bekkozha Muslimov
Fintech Overview - Bekkozha Muslimov
 
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...
Szilágyi Péter - Disintermediaton a pénzügyi szektorban. Régi versus új mediá...
 
Fintech in india
Fintech in indiaFintech in india
Fintech in india
 
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)
MDEC Fintech Conference - A Look into Bank's Fintech Initiatives (RHB)
 
Ghana's Fintech Landscape: Trends & Opportunities
Ghana's Fintech Landscape: Trends & Opportunities Ghana's Fintech Landscape: Trends & Opportunities
Ghana's Fintech Landscape: Trends & Opportunities
 
Payments Innovation Jury Report 2015
Payments Innovation Jury Report 2015Payments Innovation Jury Report 2015
Payments Innovation Jury Report 2015
 
Research paper in fintech
Research paper in fintechResearch paper in fintech
Research paper in fintech
 
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...
The Singapore FinTech Consortium - Introduction to Financial Inclusion in Sou...
 
Oppurtunities for Fintech in India
Oppurtunities for Fintech in IndiaOppurtunities for Fintech in India
Oppurtunities for Fintech in India
 
Wharton FinTech - Launching a FinTech Venture
Wharton FinTech - Launching a FinTech VentureWharton FinTech - Launching a FinTech Venture
Wharton FinTech - Launching a FinTech Venture
 
Sector Study of Financial Technology in the Philippines
Sector Study of Financial Technology in the PhilippinesSector Study of Financial Technology in the Philippines
Sector Study of Financial Technology in the Philippines
 
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016Mercer Capital's Value Focus: FinTech Industry | Second Half 2016
Mercer Capital's Value Focus: FinTech Industry | Second Half 2016
 
Fintech india: Genesis
Fintech india: GenesisFintech india: Genesis
Fintech india: Genesis
 
Money of the future 2015\2016
Money of the future 2015\2016Money of the future 2015\2016
Money of the future 2015\2016
 
Making Hong Kong a #FinTech centre
Making Hong Kong a #FinTech centreMaking Hong Kong a #FinTech centre
Making Hong Kong a #FinTech centre
 

Destacado

Accenture Technology Vision 2015 - Digital Business Era
Accenture Technology Vision 2015 - Digital Business EraAccenture Technology Vision 2015 - Digital Business Era
Accenture Technology Vision 2015 - Digital Business EraAccenture Technology
 
Accenture at Oracle OpenWorld 2015
Accenture at Oracle OpenWorld 2015Accenture at Oracle OpenWorld 2015
Accenture at Oracle OpenWorld 2015Accenture Technology
 
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud Platform
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud PlatformCookin’ up Hybrid Clouds: Chef and the Accenture Cloud Platform
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud PlatformChef Software, Inc.
 
ERCOT Settlements and the Smart Grid
ERCOT Settlements and the Smart GridERCOT Settlements and the Smart Grid
ERCOT Settlements and the Smart Gridmburlingame
 
Outsmarting the smart meter (Jfokus 2017)
Outsmarting the smart meter (Jfokus 2017)Outsmarting the smart meter (Jfokus 2017)
Outsmarting the smart meter (Jfokus 2017)Maarten Mulders
 
Managing Smart Meter with DataStax DSE
Managing Smart Meter with DataStax DSEManaging Smart Meter with DataStax DSE
Managing Smart Meter with DataStax DSEDataStax
 
ZTE - smart city solution overview
ZTE - smart city solution overviewZTE - smart city solution overview
ZTE - smart city solution overviewtechUK
 
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...Mindtrek
 
Managing your Digital Transformation
Managing your Digital TransformationManaging your Digital Transformation
Managing your Digital TransformationScopernia
 
Accenture Public Service Citizen Survey: Public Administration
Accenture Public Service Citizen Survey: Public AdministrationAccenture Public Service Citizen Survey: Public Administration
Accenture Public Service Citizen Survey: Public Administrationaccenture
 
Accenture Cloud Platform: Control, Manage and Govern the Enterprise Cloud
Accenture Cloud Platform: Control, Manage and Govern the Enterprise CloudAccenture Cloud Platform: Control, Manage and Govern the Enterprise Cloud
Accenture Cloud Platform: Control, Manage and Govern the Enterprise Cloudaccenture
 
The New World of As a Service
The New World of As a ServiceThe New World of As a Service
The New World of As a Serviceaccenture
 
Accenture DevOps: Delivering applications at the pace of business
Accenture DevOps: Delivering applications at the pace of businessAccenture DevOps: Delivering applications at the pace of business
Accenture DevOps: Delivering applications at the pace of businessAccenture Technology
 
Top Digital Transformation Trends and Priorities for 2016
Top Digital Transformation Trends and Priorities for 2016Top Digital Transformation Trends and Priorities for 2016
Top Digital Transformation Trends and Priorities for 2016Charlene Li
 
Developing a Roadmap for Digital Transformation
Developing a Roadmap for Digital TransformationDeveloping a Roadmap for Digital Transformation
Developing a Roadmap for Digital TransformationJohn Sinke
 

Destacado (18)

Accenture Technology Vision 2015 - Digital Business Era
Accenture Technology Vision 2015 - Digital Business EraAccenture Technology Vision 2015 - Digital Business Era
Accenture Technology Vision 2015 - Digital Business Era
 
Accenture at Oracle OpenWorld 2015
Accenture at Oracle OpenWorld 2015Accenture at Oracle OpenWorld 2015
Accenture at Oracle OpenWorld 2015
 
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud Platform
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud PlatformCookin’ up Hybrid Clouds: Chef and the Accenture Cloud Platform
Cookin’ up Hybrid Clouds: Chef and the Accenture Cloud Platform
 
ERCOT Settlements and the Smart Grid
ERCOT Settlements and the Smart GridERCOT Settlements and the Smart Grid
ERCOT Settlements and the Smart Grid
 
Outsmarting the smart meter (Jfokus 2017)
Outsmarting the smart meter (Jfokus 2017)Outsmarting the smart meter (Jfokus 2017)
Outsmarting the smart meter (Jfokus 2017)
 
Managing Smart Meter with DataStax DSE
Managing Smart Meter with DataStax DSEManaging Smart Meter with DataStax DSE
Managing Smart Meter with DataStax DSE
 
ZTE - smart city solution overview
ZTE - smart city solution overviewZTE - smart city solution overview
ZTE - smart city solution overview
 
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...
Simon Giles, Accenture “Will Smart Cities Ever Live Up To The Hype?” - Mindtr...
 
Managing your Digital Transformation
Managing your Digital TransformationManaging your Digital Transformation
Managing your Digital Transformation
 
Accenture Public Service Citizen Survey: Public Administration
Accenture Public Service Citizen Survey: Public AdministrationAccenture Public Service Citizen Survey: Public Administration
Accenture Public Service Citizen Survey: Public Administration
 
Accenture Cloud Platform: Control, Manage and Govern the Enterprise Cloud
Accenture Cloud Platform: Control, Manage and Govern the Enterprise CloudAccenture Cloud Platform: Control, Manage and Govern the Enterprise Cloud
Accenture Cloud Platform: Control, Manage and Govern the Enterprise Cloud
 
Building a Digital Transformation Roadmap
Building a Digital Transformation RoadmapBuilding a Digital Transformation Roadmap
Building a Digital Transformation Roadmap
 
The New World of As a Service
The New World of As a ServiceThe New World of As a Service
The New World of As a Service
 
Digital Business - Accenture
Digital Business - AccentureDigital Business - Accenture
Digital Business - Accenture
 
How to develop a digital strategy
How to develop a digital strategyHow to develop a digital strategy
How to develop a digital strategy
 
Accenture DevOps: Delivering applications at the pace of business
Accenture DevOps: Delivering applications at the pace of businessAccenture DevOps: Delivering applications at the pace of business
Accenture DevOps: Delivering applications at the pace of business
 
Top Digital Transformation Trends and Priorities for 2016
Top Digital Transformation Trends and Priorities for 2016Top Digital Transformation Trends and Priorities for 2016
Top Digital Transformation Trends and Priorities for 2016
 
Developing a Roadmap for Digital Transformation
Developing a Roadmap for Digital TransformationDeveloping a Roadmap for Digital Transformation
Developing a Roadmap for Digital Transformation
 

Similar a FinTech outlook for 2017 report discussing trends, opportunities and challenges

Payments innovation is Critical for Every Global Enterprise
Payments innovation is Critical for Every Global EnterprisePayments innovation is Critical for Every Global Enterprise
Payments innovation is Critical for Every Global EnterpriseXTRMAccount
 
Fintech and other things are coming to Town
Fintech and other things  are coming to TownFintech and other things  are coming to Town
Fintech and other things are coming to TownPietro Leo
 
Dubai Global Innovation Hub
Dubai Global Innovation HubDubai Global Innovation Hub
Dubai Global Innovation HubBruno Gremez
 
Brief for Transaction Processing Industry
Brief for Transaction Processing IndustryBrief for Transaction Processing Industry
Brief for Transaction Processing IndustryBerkeley Teate
 
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)Rudi Chatab
 
Remittance business analysis from US to China
Remittance business analysis from US to ChinaRemittance business analysis from US to China
Remittance business analysis from US to ChinaKunal Maniyar
 
Accelerating the change: London FinTech 2015-2016 Trend Report
Accelerating the change: London FinTech 2015-2016 Trend ReportAccelerating the change: London FinTech 2015-2016 Trend Report
Accelerating the change: London FinTech 2015-2016 Trend ReportStartupbootcamp
 
PayPal Pitch
PayPal PitchPayPal Pitch
PayPal PitchMikeLiu75
 
Canadian Prepaid Ecosystem 2020
Canadian Prepaid Ecosystem 2020Canadian Prepaid Ecosystem 2020
Canadian Prepaid Ecosystem 2020jennifertramontana
 
Global payments community 2017
Global payments community 2017Global payments community 2017
Global payments community 2017btlcoin token
 
Payments 2020: Banks & Payments
Payments 2020: Banks & PaymentsPayments 2020: Banks & Payments
Payments 2020: Banks & PaymentsMohit Kant
 
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...Capgemini
 

Similar a FinTech outlook for 2017 report discussing trends, opportunities and challenges (20)

OUR M&A PERSPECTIVE ON THE GLOBAL FINTECH SECTOR
OUR M&A PERSPECTIVE ON THE GLOBAL FINTECH SECTOROUR M&A PERSPECTIVE ON THE GLOBAL FINTECH SECTOR
OUR M&A PERSPECTIVE ON THE GLOBAL FINTECH SECTOR
 
Payments innovation is Critical for Every Global Enterprise
Payments innovation is Critical for Every Global EnterprisePayments innovation is Critical for Every Global Enterprise
Payments innovation is Critical for Every Global Enterprise
 
Fintech and other things are coming to Town
Fintech and other things  are coming to TownFintech and other things  are coming to Town
Fintech and other things are coming to Town
 
Dubai Global Innovation Hub
Dubai Global Innovation HubDubai Global Innovation Hub
Dubai Global Innovation Hub
 
Brief for Transaction Processing Industry
Brief for Transaction Processing IndustryBrief for Transaction Processing Industry
Brief for Transaction Processing Industry
 
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)
Global payments 2014_next_level_value_sep_2014_tcm80-171913(1)
 
Remittance business analysis from US to China
Remittance business analysis from US to ChinaRemittance business analysis from US to China
Remittance business analysis from US to China
 
Accelerating the change: London FinTech 2015-2016 Trend Report
Accelerating the change: London FinTech 2015-2016 Trend ReportAccelerating the change: London FinTech 2015-2016 Trend Report
Accelerating the change: London FinTech 2015-2016 Trend Report
 
PayPal Pitch
PayPal PitchPayPal Pitch
PayPal Pitch
 
Latest Trends Payments Industry
Latest Trends Payments IndustryLatest Trends Payments Industry
Latest Trends Payments Industry
 
Cppo &amp; fgs slide share
Cppo &amp; fgs slide shareCppo &amp; fgs slide share
Cppo &amp; fgs slide share
 
Cppo fgs slide share
Cppo  fgs slide shareCppo  fgs slide share
Cppo fgs slide share
 
Fintech Business & Payments Strategy
Fintech Business & Payments StrategyFintech Business & Payments Strategy
Fintech Business & Payments Strategy
 
Money Of The Future 1H'2016
Money Of The Future 1H'2016Money Of The Future 1H'2016
Money Of The Future 1H'2016
 
Canadian Prepaid Ecosystem 2020
Canadian Prepaid Ecosystem 2020Canadian Prepaid Ecosystem 2020
Canadian Prepaid Ecosystem 2020
 
Global payments community 2017
Global payments community 2017Global payments community 2017
Global payments community 2017
 
Payments 2020: Banks & Payments
Payments 2020: Banks & PaymentsPayments 2020: Banks & Payments
Payments 2020: Banks & Payments
 
Digital Financial Services
Digital Financial ServicesDigital Financial Services
Digital Financial Services
 
GSMA_QR.pdf
GSMA_QR.pdfGSMA_QR.pdf
GSMA_QR.pdf
 
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...
10th Annual World Payments Report 2014 from Capgemini and The Royal Bank of S...
 

Último

What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdfAdnet Communications
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.KumarJayaraman3
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023SkillCircle
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfMichael Silva
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneurabcisahunter
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoCoinGecko
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 

Último (20)

What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdf
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
 
Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 

FinTech outlook for 2017 report discussing trends, opportunities and challenges

  • 1. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited presents & FinTech Outlook for 2017 Trends, Opportunities & Challenges
  • 2. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 2 Objectives of the Report SynopsisA 3 A Primer: The Current State of the FS Industry and Key Segments Which Constellation?: The Emerging Technology and Market Forces Snapshot of 2017 Incumbents and Startups: Opportunities & Challenges A Game Theory View of Winners and the Residual Forces of Cooperation Takeaways B 5 C 13 D 17 F 32 G 37 E 26
  • 3. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 3 Synopsis A
  • 4. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 4 This paper is intended for readers who want to better understand the dramatic changes that have begun to take place—and that are accelerating—in the global FinTech landscape. The payments industry which is one of the focus areas of this report has never been more exciting. The pace of innovation has been shaken the banks (although not dramatically as some media claims), but they have realized that they need to keep the customer at the center as they go forward and meet her/his needs first. This would also mean that the infrastructure supporting the payments industry—which has never been touched upon—has to be transformed. FinTech players have also given an opportunity to banks to venture where it was prohibitively costly to venture. With the trust of customers and data available, the banks can take advantage of FinTech disruption and convert it to an opportunity either through collaboration and/or through becoming very customer-focused or recalibrating their business models. • Payments The payments industry would be in a transformational state in 2017. The ongoing war with alternate payment channels will intensify and challenges in emerging markets would force the incumbents to take drastic measures. Some key drivers would be: – Real-Time Payments: RTP represents a new phase of evolution within the payments industry, with several key features that differentiate them from current payment methods, specifically speed, value-added messaging capabilities and immediate availability of transaction status. RTP will provide FIs with the functionality/features to innovate and meet customer demand. – Blockchain: Blockchain has the potential to completely change the financial transaction processing cost model amongst its various applications. It also enables all processing to be done over a distributed system network or in the cloud avoiding the usage of costly datacenters or mainframes. • Remittances Cross-border payments have become a critical part of millions of lives as we have become a more globalized world. As cross-border payments have become more common, customers of remittance products/solutions are looking for the most convenient, cost-efficient and transparent options. Digital and mobile-based solutions, new cost-efficient models in the back-end and even the use of virtual currencies is being tried out by providers. FinTech Outlook Report – Focus on Payments, Remittance and Blockchain
  • 5. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 5 Current State of the FS Industry and Key Segments: Payments, Remittance and Leading Drivers (e.g. Blockchain) Primer B
  • 6. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 6 Current State of Payments – 2016 • Year 2016 is a special one in the payments world where credit card payments have overtaken the cash payments for the first time. • And we all know that global non-cash transaction volumes have been growing at 8% to 9% every year. • In 2015, global payments revenue was $1.16 trillion, representing 29% of banking revenues. The growth engines are transaction-related revenue (around 40%) and account-related (around 34%). • Key drivers for the revenue are movement from cash to e-payments and broader financial Inclusion. Mature and Emerging economies are moving at faster rates fueled by the regulatory environment, economic and population growth, migration from cash to non-cash and rise in financial inclusion. With growing non-cash transaction, alternative payments are estimated to account for 59% of all transaction methods by 2017. Alipay and PayPal continue to dominate globally as the most prevalent e-wallet types. Emergence of specialized mobile payment solutions are growing with technology advances and rising smartphone penetration. The value of mobile transactions are expected to reach $117 billion by 2017. Within 10 years, the revenue from APAC (Emerging) will surpass North America. Western Europe is expected to fall while Latin America will gain. $$
  • 7. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 7 • Innovation in open loop, closed loop and integrated payment apps are augmenting customer and merchant experience. • Payment processing transformation acting as a key to meet the next-generation payment methods. • Emerging economies are witnessing disruptive growth in financial services. • Growth of RTP across the globe is providing FIs with the functionality and features to innovate for the future. • Digitization of payments lies at the top of agenda for all market players. End-to-end customer experience that maximizes security, reduces complexity and provides a compelling value add would be the winner. Developments in the Payments Space • The Apple, Android and Samsung Pay eligible/user populations are becoming more mainstream. • Merchants are realizing that mobile pay acceptance is a driver to merchant selection whether users are shopping in-store, in- app or on the web. • Contactless spending is expected to continue to increase in a number of markets. • Contactless ticketing adoption in 2016 will be driven by the following key markets; Asia (including Japan, China, Hong Kong and Taiwan), Russia, France, Spain, the Netherlands and Italy. • This is expected to give NFC ticketing a similar boost to that of the retail sector. • Emerging as threat to the traditional issuers. • Consumers adopt mobile commerce experiences, not just another payment type. • Visa and Mastercard are creating easy on-ramps for issuer wallets. Alternate Payments Mobile Wallets Contactless Payments on the Rise
  • 8. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 8 Current State of Real-Time Payments – 2016 • There are currently 18 countries ‘live’ with RTP systems, 12 countries that are ‘exploring/planning/building,’ and an additional block of 17 countries that are ‘exploring’ through a pan-Eurozone initiative. • ISO 20022 is seen as a way to improve payments efficiency, to create a common, level playing field. • In the United States, the Federal Reserve Board has called for the implementation of “a safe, ubiquitous, faster payments capability” and The Clearing House has announced that it will create a national RTP system.
  • 9. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 9 Current State of Remittance – 2016 • In 2015, worldwide remittance flows are estimated to have exceeded $601 billion. Of that amount, developing countries are estimated to receive about $441 billion, nearly three times the amount of official development assistance. The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be significantly larger. • High-income countries are the main source of remittances. The United States is by far the largest, with an estimated $56.3 billion in recorded outflows in 2014. Saudi Arabia ranks as the second largest, followed by the Russia, Switzerland, Germany, the United Arab Emirates and Kuwait. The six Gulf Cooperation Council countries accounted for $98 billion in outward remittance flows in 2014. Remittances • New online players have emerged and have raised the bar in terms of customer experience (digital/mobile channel) and costs of remittance. • Almost all major players successfully raised new funding rounds in the past six months: WorldRemit – $45M (total – $192,7M), TransferWise – $26M (total – $117M), Remitly – $38.5M (total – $61M), Azimo – $15M (previous round – $20M). • High scope for mergers as customer acquisition is quite expensive. • Social remittances hasn’t picked up except WeChat. Online Remittances
  • 10. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 10 Current State of Remittance – 2016 Highly fragmented, with market growth attracting additional participants . The incumbents… …niche players… …and innovators. • Big cash-to-cash players wary of cannibalization • Look to retain end-to-end control of the service • Cherry-picking specific corridors • Leveraging ethnic market loyalty • Market share increasing rapidly • Generating the biggest flows towards mobile money services Annual Remittance Market 2015: $582 Billion Remittance Companies Powered by Blockchain Technology ~ 85% Cash ~ 12% Bank < 3% Other (mobile wallets, cards, etc.)
  • 11. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 11 Current State of Blockchain – 2016 • Expected to be the future of financial infrastructure and could lead to rewiring. • Awareness of Distributed Ledger Technology (DLT) has grown rapidly, but significant hurdles remain in large-scale implementation. • Digital identity is a critical enabler to broaden applications to new verticals; digital fiat (legal tender) has the ability to amplify benefits. • Applications of DLT will differ by use case, each leveraging technology in different ways. Blockchain Implementation of the blockchain technology as real business is curbed by the very benefit that if offers. The technology is developed for mass adoption (with all stakeholders involved) and has no use without it. • Most projects (a range of wallets and money transfers has appeared over the last half-year) are in their experimental and product adjustment stage and have a long way to go to influence the market. There are a few projects (such as Everledger) which could show scale but there is a need of many such projects. • Rising of Etherium “The digital currency ether has been generating substantial visibility, a development that could draw attention – and trading activity – away from bitcoin.” • R3 completes “biggest-ever” trial of blockchain solutions with 40 banks. • Debate emerges over speed of blockchain adoption – will major changes take place soon (e.g. within two years) or 5–10 years away? Areas of Focus Corporate Bonds Repos Swaps Insurance System Interoperability Payments Settlement Trade Finance
  • 12. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 12 Current State of Blockchain – 2016 DLT Activity Global Interest Bank Experimentation Research Venture Capital Consortium Efforts Pilots 80% of banks predicted to initiate DLT projects by 2017 Over US$ 1.4 Billion in investments over the past 3 years. VC investment in blockchain startups exceeds bitcoin startup investment for first time 2,500+ patents filed over the last 3 years 24+ countries currently investing in DLT R3 completes “biggest-ever” trial of blockchain solutions with 40 banks Microsoft’s Azure Blockchain- as-a-Service (BaaS) adds 21 new partners Hyperledger Project grows to 40 members
  • 13. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 13 The Emerging Technology and Market Forces Constellation C
  • 14. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 14 Cloud FinTech are major adopters of the cloud services. Apart from scalability and cost benefits, cloud service providers also help FinTech startups build compliant IT Infrastructures. Omnichannel Banks are looking to integrate their multiple digital channels into an omnichannel customer experience and leverage their existing customer relationships and scale. APIs The incorporation of application program interfaces (APIs) enables third parties to develop value-added solutions and features that can easily be integrated with bank platforms. Big data, AI & Cognitive The growth of digital universe across industries has led to the Big Data revolution. Some of the areas in financial services that are seeing major overhaul include credit scoring, customer acquisition and retention, risk management, investment management. Another growth segment has been cognitive sciences. The explosion of data availability and lowering data storage costs has led to better customer behavior models built utilizing machine learning, artificial intelligence and natural language processing techniques. IoT The IoT focus for financial institutions has been on products. The most important business process improvement is tailoring their products and services for customers. From recognizing customers who step into a branch, to customers who favor drive-through banking to pay for products at places like restaurants and gas stations while in their car, have all been possible with IoT technologies. Omni Channel APIs Big data, AI & Cognitive IoT Cloud Technologies Key Technologies Shaping FinTech
  • 15. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 15 What's Next From a FinTech Perspective? • API-based financial services are on the rise. In fact, APIs are the main reason that startups are able to build their products faster. • Open APIs enable developers to build customized applications that cater to users across the board. • As FinTech startups continue to benefit from open APIs, banks are also waking up to the fact that offering an open API is the way to engage and retain their digital customers. API Based • The demand for wearables such as smartwatches and smart fitness wristbands has escalated substantially over the last few years. • In fact, many financial institutions have displayed a deep interest in wearable technology. • About 82% of financial professionals believe that smartwatches will facilitate financial transactions in the future! What’s more, 72% of these professionals have wearable applications on their three-year road. Wearables • Twitter has proven to guide and help predict the stock market. Some examples of how tweets can move stock prices include 20% plummeting of Twitter’s stock after disappointing quarterly earnings were tweeted ahead of their expected release. On the other hand, Tesla’s shares jumped four percent when Elon Musk tweeted about a new product line. • With around 85% of US equity trades being executed by algorithms, the trend of predictive analysis through social media is only going to grow in 2016. • Apart from equity trading, rising social media usage has led to better behaviour profiling of customers, personalization of offers, security features based on users location, customer service management and other services being adapted by financial institutions. Social Media • Banks have recently begun to leverage technology to improve processes, customer experience and security. • There has been a convergence of banking and FinTech, especially since both are evaluated on the same metrics by regulators, investors and consumers. • This trend will continue in 2016 as the difference between traditional banking and FinTech disruptors gets blurred.
  • 16. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 16 The threat of disintermediation in the payments industry is both real and imminent • The world of payments remains in constant flux, reflecting an ongoing rebalancing of power among incumbent banks, digital giants, financial technology (FinTech) startups, card networks, and of course, consumers and merchants. • Driven by rapid advances and investments in digital payments offerings and capabilities, the global payments landscape is undergoing a profound transformation. By 2017, alternative payments will account for 59% of all transaction methods. New payment players defining frictionless user experience. Shift would have big impact on sources of revenues across market. Two markets emerge: Developed: Customer convenience and front-end innovation. Emerging: Financial inclusion and way to reach customer innovation. New Methods New Players Rev Impact Markets Retail Payments/Remittance Future – Market Forces at Work
  • 17. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 17 Snapshot of 2017 D
  • 18. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 18 Share of Global Revenues in % Terms Is Going to Change Quite a Bit by 2024 28% 28% 28% 27% 24% 20% 21% 22% 22% 27% 16% 15% 14% 13% 11% 13% 14% 14% 14% 15% 10% 9% 9% 9% 8% 8% 9% 9% 9% 8% 3% 3% 3% 3% 4% 2% 2% 2% 2% 3% 2014 2015 2016 2017 2024 N. America APAC W. Europe Latin America Asia Pacific E Europe Middle East & Africa RoW 2014 - 2017 World Wide 100%
  • 19. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 19 Volume, Value and Total Revenue 145 153 163 173 273 307 320 337 354 478 2014 2015 2016 2017 2024 46 49 52 56 92 145 161 169 179 295 2014 2015 2016 2017 2024 32 34 36 38 58 87 98 104 112 168 2014 2015 2016 2017 2024 99 98 101 105 137 172 167 169 170 215 2014 2015 2016 2017 2024 40 45 50 55 109 221 236 262 291 543 2014 2015 2016 2017 2024 8 9 10 11 25 29 30 34 39 77 2014 2015 2016 2017 2024 432 453 481 512 811 1090 1145 1215 1293 1989 2014 2015 2016 2017 2024 9 10 11 12 22 23 26 28 31 57 2014 2015 2016 2017 2024 North America Eastern Europe Western Europe Latin America Middle East & Africa Asia Pacific World Wide Rest of the World Value ($ Bn)Total Revenue ($ Bn)Volume (Bn)
  • 20. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 20 Emerging Markets Payments: 2017 Outlook North America • Credit cards continue to generate bulk of revenue. • Issuers to focus on digital channels. • Focus on m-wallets to ensure engagement. Europe • Payment revenue under pressure due to regulatory framework. • Focus on pricing models as transaction fees are squeezed and interest income on accounts has shrunk due to low interest rates. Asia Pacific • Clear winner. • High margin cards source of strong transaction revenue. • Digital channels are key as markets are value-conscious. • Strong growth from emerging markets. • Transaction revenues are a source of growth. • Strong government and industry initiatives to move towards e-payments. Developed Market • Stable slow growth. • Integrated payment applications are augmenting customer and merchant experience. • In-app payments where the payment mechanism is embedded in the mobile app.
  • 21. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 21 How Would 2017 Look Like for Blockchain? • About 15% of banks and 14% of financial market institutions intend to implement full-scale, commercial blockchain solutions in 2017. • Faster than expect adoption of blockchain by banks. We will likely see a number of real-life applications of blockchain applied to payments, beyond digital currencies, in the next five years. Private permissioned blockchain-based systems will gain significant transaction volumes. Digital currency will evolve and be more accepted in the mainstream. Most of the countries would start looking at having a digital currency of their own. IoT and digital payments will ensure a more automated and seamless retail customer experience. Transition to a blockchain- dominant payment system will depend mainly on interoperability. Direct payment flow between two end points would be a reality.
  • 22. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 22 How Would 2017 Look Like for Cross-Border Remittances? Estimate and Projection for Remittance Flow to Developing Countries ($ Billions) 0 100 200 300 400 500 600 700 2015E 2016F 2017F 2018F Regions 2015E 2016F 2017F 2018F World 581.6 603.2 626.4 651.3 Developing Countries 431.6 447.9 465.7 484.7 East Asia and Pacific 127.0 131.0 135.5 140.3 Europe and Central Asia 34.6 36.3 38.3 40.3 Latin America and Caribbean 66.7 69.3 71.9 74.6 Middle East and North Africa 50.3 51.6 53.0 54.5 South Asia 117.9 123.3 129.3 135.8 Sub-Saharan Africa 35.2 36.4 37.7 39.1 Regions 2015E 2016F 2017F 2018F World -1.7% 3.7% 3.8% 4.0% Developing Countries 0.4% 3.8% 4.0% 4.1% East Asia and Pacific 4.2% 3.2% 3.4% 3.6% Europe and Central Asia -20.3% 5.1% 5.4% 5.2% Latin America and Caribbean 4.8% 3.9% 3.8% 3.8% Middle East and North Africa -0.9% 2.6% 2.7% 2.8% South Asia 2.0% 4.6% 4.9% 5.1% Sub-Saharan Africa 1.0% 3.4% 3.7% 3.7% In $ Billions -25% -20% -15% -10% -5% 0% 5% 10% 2015E 2016F 2017F 2018F In % Growth Rate
  • 23. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 23 The growth rate of remittance flows to developing countries is projected… Cross-border remittance revenue… The non-banks using proprietary networks…. High penetration of mobile banking and last mile connectivity has led to surge of firms… Remittances to developing countries are expected … How Would 2017 Look Like for Cross-Border Remittances? to RISE to RISE will INCREASE have CAPTURED offering LOW VALUE Cross-Border Remittances Significant Market Share In All Regions 4% a Year in 2016-17 4% a Year in 2016-17
  • 24. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 24 How Would 2017 Look Like for Cross-Border Remittances? • Existing business model under pressure from newer business model. • Decrease in remittance fee. • Global average fee is expected to reduce to 7.52%. • Uptick in overall remittance growth. • In 2015–16, the remittance growth slowed down owning to weak economies and weaker currencies. • This trend is likely to reverse due to US recovery. • Social media for money transfer. • Exploring social media for money transfer. • According to the World Bank, 90% of money transfers happens between friends and families. $$ The titans (WU, Moneygram, likes) of the “cross-border money transfer” market, with a ~15% worldwide market share, are being challenged by multiple well-capitalized upstart companies targeting the $582-billion remittance market.
  • 25. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 25 How Would 2017 Look Like for Real-Time Payments? SWIFT announced a global initiative designed to use its existing global network of correspondent banks to enable same-day payments between businesses anywhere in the world. • The emergence of innovative real-time payment services is having a transformational impact on the underlying payment systems. • Interoperability and efficiency gains are key aspects for both FIs and regulators. • Adoption of ISO 20022 would be a trigger point for faster adoption of real-time payments. • Standardization and innovation is the key. • Focus on speed and making it better. • Non-bank network players such as Dwolla and Pop Money. United States Big banks in the US have a “growing sense of urgency that they are behind and getting. Testing for real-time payments should go live toward late 2017. US real-time payments initiatives are ambitious and focused on ubiquitous payments, with the top 24 US banks accounting for 60% of the industry. Of course, the real challenge is reaching the entire financial ecosystem, which encompasses 14,000 financial institutions in the US. Europe The real-time payments services in the Single Euro Payments Area that was created by the European Payments Council has goals to be in place on that timeframe.
  • 26. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 26 Incumbents and Startups E Opportunities & Challenges
  • 27. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 27 Key Opportunities for Startups More than 20% of FS business is at risk to FinTechs by 2020. FinTechs are succeeding where banks have failed. Disintermediation: FinTech’s most powerful weapon Key Drivers: Radical shifts to client demographics, behaviors and expectations. Expectations: State-of-the-art customer experience, speed and convenience will further accelerate the adoption of FinTech solutions. Funding of FinTech startups more than doubled in 2015 reaching $12.2bn, up from $5.6bn in 2014. Consumer banking and payments, already on the disruption radar, will be the most exposed in the near future, followed by insurance and asset management. Customer centricity is fueling disruption: FinTech is riding the waves of disruption with solutions that can better address customer needs by offering enhanced accessibility, convenience and tailored products. 20%
  • 28. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 28 Key Opportunities for Startups Region Segment Total Market FinTech Addressable Potential Examples Global Payments & Remittance $1.1 trillion (revenue) $110 billion (revenue) • Stripe has processed an estimated $20 billion in payments volume in 2015. • Adyen & Braintree both processed $50 billion each, (payments volume in 2015). • TransferWise: An estimated $6.6 billion transferred in 2015. United States Consumer Payments Consumer Remittance $91.5 billion (revenue) $3.8 billion (revenue) $15.5 billion (revenue) $950 million (revenue) Global Asset/Wealth/ Investment Management $76 trillion (AUM) $2.5 trillion (AUM) • Betterment $3.9 billion AUM • Wealthfront $3 billion AUM United States $30.1 trillion (AUM) $1 trillion (AUM) Global Lending $4.7 trillion (loan origination) $1.6 trillion • Lending Club $15.9 billion • OnDeck $1.9 billion
  • 29. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 29 Key Opportunities for Incumbents (Banks) Customer Relationship1 | Banks have been the backbone of modern economies since their inception and will continue to be so well into the future. FinTech Need Banks 2| Banks have gone through legal and regulatory compliance for years. FinTech would definitely to collaborate with banks. Data and Trust3 | Scale 4| Banks have big data — really big data. The new technologies would enable banks to reduce the cost of operations and innovate. Banks’ sales force and customer service infrastructure are huge.
  • 30. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 30 Key Challenges Faced by Banks (US)
  • 31. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 31 Key Challenges Faced by Startups While FinTechs have been quick to move ahead on the technology innovation and customer relationship, they have huge disadvantages in terms of retail presence (channels) and regulation/compliances. The other key handicap would be brand/trust and data which is critical for scaling up. Bank/FI Profile Retail Presence Organizational Knowledge of Money Movement Infrastructure Loyalty/ Customer Relationships Regulatory Infrastructure including Legislative Influence & Compliance Brand Operational Infrastructure Technology /UX/UI Top 10 BofA, Wells, Citi Regional Banks Suntrust, BB&T Credit Unions/ Community Banks Online/ mobile only Banks CBW, MetaBank, Ally Bank, Synchrony FinTech ? ?
  • 32. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 32 Game Theory F A Game Theory View of Winners and the Residual Forces of Cooperation
  • 33. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 33 Many banks are realizing that they need to act and are planning their future actions to partner or compete with startups. Innovation is at the top of the strategic agenda. Winners (and WAR) or Coopetition (and Cooperation) • A clear intent to innovate will be important. The sooner banks start working on improving experiences and the farther they are ready to go, the winners and losers will be separated. • Open Innovation and Open APIs are the underlying drivers for the next phase of growth that banks are set to explore. This is seen as a natural step forward to embrace the growing need for co-development, reusability and agile/rapid application development requirements. • The rhetoric around FinTech disrupting the banks is tapering down and giving way to discussion around cooperation and partnerships. Banks and FinTechs are working together now. Consumer Behavior and Technology Drivers are forcing banks to innovate and close the gaps. The FinTech threat is very real. The most profitable services for banks such as lending/loans are being targeted and mainstream customers are opting for new experiences.
  • 34. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 34 Internal Incubator Strategic alliances with FinTech players: The goal is to explore new business opportunities, technologies and to share knowledge. Designing, developing and applying internal initiatives with the collaboration of 'intern' entrepreneurs or developing projects in conjunction with strategic partners. A few banks have reinforced their capacities and expertise in design, big data and user experience through the acquisition of innovative business models such as Simple, Atom, Holvi or SpringStudio. Strategic Alliances Digital M&A and Direct Investments What are the ways for Co-operation
  • 35. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 35 Game Theory Approach for Banks & FinTech Startups — Win for All • Innovation loss • Longer GTM timelines • Legacy overrule • Siloed efforts • More investments • Innovation loss • No result competition Compete • Service accessorization • Industry innovation • Win-Win model • Legacy & innovation alignment • Shorter GTM • One sided innovation model • Un- sustainable • Industry distrust • Distress industry consolidation Collaborate Banks FinTechStartups CompeteCollaborate
  • 36. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 36 Working Together Co-Exist Compete Finding Niche Startups like Lending Club and Square are growing into billion-dollar businesses overnight, and they have the potential to become mini- banks in their specialized areas within the next five years. These new companies are attempting to scale their core businesses with other diversified offerings. Venmo, for example, is a free digital wallet that has opened the door for merchants to use their credit facilities. Creating Capabilities BNY Mellon and several other banks are working with the digital payments company Early Warning® to automate business-to- consumer (B2C) payments without requiring their business customers to store and maintain consumer banking information (e.g., transit routing and account numbers). Banks can offer this solution to their business clients who need to make payments to consumers who hold US bank accounts. London-based TransferWise, the money transfer firm valued at $1 billion, has integrated its service into the smartphone app for LVH, Estonia's largest bank. BBVA Compass teamed up with the online investment company FutureAdvisor, with the hopes of reaching a new segment of customers with an appetite for lower-cost automated advice. Again, this kind of tiered offering – robo-algorithms, supplemented with personalized human guidance at a higher price depending on customer requirements – is intended to expand and enhance, rather than replace, banks’ current services. Collaborate Examples
  • 37. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 37 Takeaways G
  • 38. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 38 • We are seeing almost a perfect storm for technology- and experience-driven consolidation and/or atrophy over the next decade, as opposed to macro- economic/financials-driven structural changes. • Over the next 5–10 years, the financial services delivery will not remain with the incumbents and FinTech players of today. Enabled by open APIs, commerce players, brands and others would be able to accept payments and disburse loans using bank APIs directly. Takeaways… Takeaways
  • 39. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited 39 Almost every FinTech startup wants to disrupt the big banks, but the problem is that it isn’t a fair fight. The US banking sector (and globally) is so entrenched and protected that challenging it from the outside is an exercise in futility. The smart startups know this and will use it to their advantage. In this coming of FinTech 3.0, FinTech startups will partner. FinTech 2.0 based innovation starts when incumbent players in the market were trying to leverage their considerable resources to remain competitive amongst startups. Everyone from American Express to Bank of America now have “innovation centers” where they try to foster the startup mentality while leveraging their established brands and infrastructure. The challenge, of course, is that no matter how hard they try, incumbents can never match the agility and risk appetite of startups. Corporate politics, changing strategies, and an overwhelming desire to protect the brand serve as hindrances to innovation. At the end of 2008 financial crisis, new regulations and changing consumer demands began to emerge as the world tried to pick up the pieces of the “great recession.” These changes made certain lines of business significantly less profitable for banks and other financial institutions, creating an opening for tech-enabled startups and brought up FinTech 1.0 to step in and fill the void. This coupled with the changing demands of consumers and the democratization of big data, led to a FinTech renaissance of sorts. 1.0 FinTech 2.0 FinTech 3.0 FinTech FinTech 1.0 to 3.0 ..
  • 40. © Let’s Talk Payments, LLC | Copying or distribution without written permission from Let’s Talk Payments is prohibited Thank you. LET’S TALK PAYMENTS, LLC PO Box 473944 Charlotte, NC 28247, USA Phone: +1 (202) 552-5998 follow@letstalkpayments.com OPUS CONSULTING SOLUTIONS INC. 1300 E Woodfield Rd, Suite 308 Schaumburg, IL 60173, USA Phone: +1 (630) 635-2933 marketing@opusconsulting.com