The Best Reads On FinTech From Last Week
Selected pieces on financial technology from the week gone by.
Why Fintech Is Different in Asia
Asia’s market dynamics and diverse population create a different set of opportunities and challenges than those faced by U.S. fintech entrepreneurs. Here are four factors that make Asia’s fintech landscape different:
1. Geographic Fragmentation. Asia has more than 20 countries, each with their own economies, currencies and regulatory bodies
2. Growing Consumer Class. An Asian growing middle class population is consuming more. Alibaba, Flipkart, Tencent, Lazada and Snapdeal are some of the largest e-commerce players in Asia. E-commerce is still in its infancy in Asia and will have high growth as more underbanked individuals join the financial system
3. Unbanked Populations. 2 billion people around the world are unbanked. Slightly over 50% of them are in Asia, particularly India. The Aadhaar program is the largest biometric database in the world and may prove to be a game changing project for fintech and financial inclusion.
4. Mobile Penetration. Asia leapfrogged the landline era and went straight to wireless and mobile. The result has been mobile phone penetration rates of 80% in India to as high as 99% in Indonesia. Payment apps and digital wallets are flying high in the fintech landscape as smartphone penetration increases.
JP Morgan Chase to Hire 1,800 for Fintech Jobs
After setting up camp on the old grounds of Wilmington’s AstraZeneca complex, JPMorgan Chase is continuing to expand its fintech department and plans to hire more than 1,400 Delawareans.
The company is also investing $200 million for office expansion and training. The company’s strategy is to increase online and mobile app expertise
According to Garrett Baldwin of Modern Trader, based on 150 interviews with the top banking executives, the Top 10 trends in 2016 that will capture the attention of the market are:
1. Increased Sophistication and Collaboration in Technology
The biggest trend will be an increase in the sophistication of the tools available for the everyday investor. It used to be that the pros had custom software to meet very specific needs, but now there are all kinds of startups filling growing niches for everyone. For example, last year very few retail investors would have ever invested the time and effort it required to manage a delta-gamma-neutral options book, but today they use our tools to do it in seconds.Ed Kaim, Quantcha
2. Rise of Artificial intelligence, virtual reality and robo-advising
We will see increased traction and exponential growth in online advice and discretionary wealth management tools such as robo-advisors. People will increasingly embrace wealth management solutions like robo-advisors and companies will leverage technology to make the process even easier and more convenient.Alex Conde, Questrade
3. The
Continued Rise of Big Data
A shift toward analytics platforms that make datasets smarter. It’s time that finance specific applications are developed and adopted in order to more effectively gain insights into these data feeds, allowing investors to become more informed and make better investments.Zain Hoda, Alpha Hat
4. Rise of
Alternate Products and the Sharing Economy
The biggest trend in fintech this year will be the democratization of investing that disintermediates entrenched financial institutions. Robinhood, Motif, Betterment, ClosingBell and CrowdInvest are companies that attack the financial industry by harnessing technology to undercut fee structures.Martin Mickus, CrowdInvest
5.
Increased Automation
The year 2016 will be all about ease-of-use. It will manifest in different kinds of applications, from automated investment management to new user onboarding. A lot of new investors will join the markets this year driven by technology built to increase transparency of information and imaginative interfaces.Sitashwa Srivastava, Stockal
6. Fintech
IPOs
With some shakeouts and less than stellar IPOs in 2015 - we could see some shake outs.
7.
Security Management
Continued Breaches and attacks have necessitated the urgent need for enhanced security measures and new tools and technologies. There has been spate of developments already in this space.
“With all the recent data breaches, security within financial services is one of the most talked about trends recently. It’s one of the things that has the power to affect us the most. With mobile banking and payment technologies growing at record-breaking speeds, security management is growing at equivalent paces to keep up with these innovative products that need security technology to perform the way they should.”
8. Regulatory Interest
[In addition to advancements in the robo-space], the continued ramp-up toward implementing the Department of Labor’s (DOL) proposed fiduciary rule [also will be a trend]. If the DOL rule becomes effective in 2016, we will transition from evaluating its impact to planning for the implementation of the new regulations. It’s a material shift for the industry, and could be the cause of both significant disruption and opportunity.Aaron Bauer, ENVESTNET
9. Block Chain Interest and Developments
Block chain is now more than a fad as global banks are working towards a unified solution for inter-bank transactions. The central banks have also taken active interest.
Blockchain technology and open source APIs and data feeds will begin to take the spotlight in 2016. Most of the face time and attention the past few years have been on payments, lending and robo-advisors. Blockchain technology has the potential to change the way our world works.Rachel Carpenter, Intrinio
10. Mobile Expansion and Connectivity
The most exciting fintech advancements on the consumer front are mobile payments becoming mainstream, new wealth management models coming online and [new] methods of transferring money becoming available to an increasingly global, distributed population.Jack Kokko, AlphaSense
Additional
Trends of Note are the Following
The growth enterprise IoT initiatives will increase the demand for cyber
insurance policies in 2016. Traditionally Cyber Security concerns have
primarily revolved around the threat of stolen data, such as credit card
numbers, bank account information, user id and passwords, etc.
- The growth of IoT devices has added another layer of security issues.
- The Insurance Industry will embrace healthcare and connected home to IoT devices as a way to price insurance policies.
- We are witnessing Apple, Google, and Samsung build out commerce experiences around their payment products.
- From Dongles to NFCs to Mobile Applications - we will now see more business management applications built around the POS devices in the SME space.
- The Beacon technology and IoT devices will go main stream with payment applications and services
The P2P Lending industry will hit head winds and be under the regulatory scrutiny with mounting credit losses.