Fintech progress seems to be as unclear in Asia as most other regions. China is probably the leading fintech market, but as a whole, fintech development is still more like an evolution for launching new services with some more tech than really disrupting anything. Lending is the most important service category, but it is not always what it looks like.
Autumn has again been the time for several fintech events in Asia. For example, I moderated a couple of Horasis think-tank discussions with top level fintech experts and influencers from China and the rest of Asia. The common conclusion was that it is not easy to summarize the status of fintech. There are several interesting new services and technologies, but nothing has really disrupted traditional finance services – yet.
Typical fintech discussions include comments about Chinese money transfer services, several mobile and online lending services, online identification, KYC and AML solutions and importance of data in all new services. We have seen some big success stories in payment and money transfer services globally, like Stripe, TransferWise and Square, but not too many other unicorns have emerged yet.
Several online and mobile lending services are making significant money. One could ask, is it really fintech, alternative finance or loan shark business. For example, Indonesia has closed several P2P lending services, that haven’t been real P2P lending, but more similar to high interest rate lending to poor people. They include some tech, like loan applications with a mobile app, but it is hard to call them disruptive businesses.
We can say new services are often:
All these things are relevant and can be good for those people who were previously outside traditional banking services, exposed to loan shark business that were using these people. But it is not really about forcing the existing Asian banks to change in any significant way. One discussion I participated in included jokes about how terrible some online banking and mobile services are, when banks have just built some new front-ends onto legacy IT systems that make the services even slower than before.
Blockchain and distributed ledger versions have been the candidates to seriously challenge the old finance systems. Now we have suffered the hangover of the ICO hype and it has cast a shadow on all blockchain solutions. It doesn’t mean that distributed ledger solutions couldn’t be the real challenger, but it will take some time and more solutions that can prove their real value, not just selling fancy tokens.
One panelist crystalized the fintech problem in a nice way: “we don’t see a real disruption until we move from fintech to techfin.” This can really illustrate the problem of slow progress. Most fintech solutions haven’t really been able to use technology to totally change existing services, processes and infrastructure. It has been more about using stepping-stones to introduce some more tech and develop services. Many fintech people also come from the finance industry and try to convince others that strong finance competence is necessary to build new services. But they don’t have an understanding and competence of how technology disruption really works.
Some components that are typically important for faster technology disruption:
I have sometimes summarized those points by saying, when we have the ‘Uber of finance services,’ meaning a company that has resources to make an excellent service, push it to the market and also challenge incumbent players and the old regulation.
It is easy to see that finance services will encounter a significant disruption. The difficult question is, as always, how and when it will happen. Let’s be frank, we are still in the very early phase of fintech and most fintech companies have a hard time to find their purpose and business model. The main reason is that they still simply try to be upgrades to existing finance services and not create new, disruptive and totally digital finance services. Maybe we will never see the big breakthrough to techfin while fintech continues to change finance services.
The article first appeared on Disruptive.Asia.
There are many ways, companies analyze and monitor consumers. They know what you buy, how much money you spend, where you move, what products you search for, what your preferences are and many other things. If we compare this to the military world, it is like one party spying and using sophisticated intelligence to monitor another party in order to identify them, determine what to do next, what is the right timing to do something and what are the strengths and weaknesses of the other party.
But in the military world it is normal that both parties try to collect information, gather intelligence and also have counter-intelligence, otherwise the situation significantly favors the party that dominates information. In the consumer market it is very much that only one other party uses sophisticated intelligence and benefits. How could we change that?
Based on customer data, businesses typically try to understand, for example, the following aspects:
At the same time consumers have many questions too, how they should buy products and services and where, for example:
Consumers think of these questions quite often and try to find answers to them, but it is typically based on very limited data, analytics and processing capacity. They might have seen a few offers, don’t have all details, then quickly try to make some conclusions in their heads. At the same time, the other side, businesses, use smart algorithms, a lot of collected and purchased data and a lot of cloud computing power to get a consumer ‘on the hook’.
It sounds like an unfair situation. Isn’t it also against a main principle of free markets, that each party should have all relevant information, otherwise the market cannot function properly? At least, if we think of the military example, a military organization would quickly spring to action if the other party dominated the intelligence frontier.
Fortunately, we have now arrived at a situation where consumers could really start their own counter-intelligence action. Only 5 to 10 years ago this would have been very difficult. Technology, regulation and business changes have enabled this, for example:
They need better tools to collect the data from multiple sources and tools consumers can use to manage their own data and find relevant information from businesses. They also need data models that can interface with businesses and better algorithms, especially to fight for consumer’s interests. And we are very close to seeing these tools.
The last 15 years have made data the epicenter of business, but it hasn’t been balanced development. It has meant the dominance of businesses over consumers, but also on the business side it has been dominance of some companies that have got much more data than others. When enough parties that don’t like that dominance get together things start to change and technology and services are developed to challenge the dominance. We are now at that point – it is the time of consumer counter-intelligence.
The articles first appeared on Disruptive.Asia.
We are stepping into a new decade, and it is also a new decade for the Grow VC Group. Our journey since 2009 has been in the middle of digitization, fintech and data disruptions. Now is a good time to look a little bit back and especially forward.
We started with the world's first equity crowdfunding service. Quite rapidly we realized that the startup equity crowdfunding market is not a huge business, especially it was not as scalable as we expected. Now 10 years later we can see, it is still a small business and not many platforms can really make money in that market.
We had a portfolio of online finance, crowdfunding and finance platforms. During the last five years we have sold or closed down most of those companies and now prepare to close down the whole portfolio that comes from the crowdfunding roots. The only company in that portfolio is now Difitek that is also more a tech company, offering an open API platform to implement digital investing and lending services.
At the same time, we have built new portfolios of companies. We are still active in some finance technology areas, but we would like to see a transformation from fintech to techfin, i.e. to have services where technology really disrupts finance services or creates new categories of services. Now too many fintech services have been only new tools or channels to offer very old services and we haven’t seen, for example, really new business models or concepts to develop new services.
We see digitization and data are really in key roles to change all businesses. Our new company portfolios include, for example, the following companies:
Although we have had changes with our focus and companies, we still have the same principles as a decade ago: we build global business from day #1, we are very entrepreneurship driven and we are always willing to challenge existing models and businesses. We want to work with people and companies that share the same principles.
We don’t know what changes will happen in business during the next decade. We believe there will be a lot of changes, new challenges and opportunities. Anyway, there are always opportunities for entrepreneurs that are willing to create new and better services. It just needs the right attitude to see the opportunities and make them happen.
To all our companies, people, partners and entrepreneurs around the world, we wish a successful New Year and start of the new decade.
How many times you have heard said that you must find your passion? Especially nowadays, it’s popular talk that you must find a job you feel passionate about, or you must find a company that helps you pursue your passion? But is it really a good idea to follow that passion, and does that make you a better employee or entrepreneur? There might be much more important qualities to realize your dreams.
It has become trendy to find a startup; one could say almost like a hype. Of course, most people don’t do it, but they talk about it and dream about it. I cannot count how many people have talked to me about how they would like to start their own company and even shared their business plan with me. Then they have got to a point where they realize that “this is really my passion, and now I waste my time in this boring job, where I cannot implement my own dreams.”
It is, of course, nice that people have dreams and even better if they can implement them. But if you are not committed to realizing them it could just be a waste of time, although it’s still nice to dream. Many of these passionate business ideas also sound naïve or not that concrete. Because I’m not such a polite person, I often also say this to people. Some people answer that they respect my honest feedback, but some don’t like it very much.
I have personally participated in building many companies from scratch. Some of them have been more successful than others. I have also done something similar in other areas, like helping a person to start a political career and create some non-profit movements. Of course, the start needs some passion, but at the same time I haven’t seen many ideas fly very far with passion alone.
Especially, I have felt that success needs hard work. It also requires that you have luck (e.g. with timing and sometimes to meet the right customer or investor), but the more you try and work, the higher probability you have to be lucky one day. It is also extremely important to listen to feedback, learn from the market and to be able to adjust your offering and business all the time.
The last point, amend your business, is easily in conflict with your passion. You might have an idea to offer a certain type product, run one type restaurant or serve some customer segments, but the reality might be that that model doesn’t work, and you should change your concept. Then you must, at least, decide, if your passion is to create a good business or implement your original dream.
I have also seen wannabe entrepreneurs, who have read about great funding deals and big exits in a few years. Then they have, for example, proposed cooperation to start a company. Each time I become more skeptical about these, if the person has no experience to start and run companies. I have often seen that after two months they start to cry that their severance package runway ends soon, and someone must organize funding that they don’t need to take a hit to their living standards. Personally, they don’t necessarily see that it should be them who organizes the funding, because they have read from TechCrunch and Forbes, that the funding just comes to the company.
Quite often those people have also felt they have a passion to do something else than their daily boring corporate work. Then they are really surprised that to build your own company is not only to implement personal passion projects, but actually run many daily tasks to keep the company up and running and quite hard things too, including talking to dozens of customers and investors that say no to your passion.
My point is not to criticize dreams to start your own business, pursue things you like or first-time entrepreneurs that have a lot of things to learn. It is something that I have done, too, and made many mistakes. I want to criticize the recommendation to “follow your passion.” It is more difficult to really achieve something. I would say commitment is much more important than passion. It means that in order to do things to take you closer to your dream, you really are ready to go thru difficulties and find a way that works. Whatever you do, it has more and less motivating parts to it.
It is great and important to get more people who are ready to make the world better, change old businesses and also other things in the world and society. It is definitely OK to indulge in your passions, but don’t think that following them automatically creates results or success. If you want to achieve something, you must get it to happen, whatever it takes. And you definitely need commitment to get things to happen.
The article first appeared at Disruptive.Asia.
One could easily think that IT and digitization are somehow the same thing – or at least support one other. The corporate reality is that it is sometimes the opposite. It is often the legacy IT and the IT department that are the obstacle to new digital models. Is there any way to get traditional IT and digitization to work together or do we need total disruption to change things?
Legacy IT systems have been built to support processes and operating models that were dominant when the original systems or architectures were designed. It generally happened before truly digital companies began to emerge. By digital companies I mean companies that are built on digital data, data-oriented processes and models built on digital customer experience. We can see that companies such as Google, Uber and Amazon are examples of really digital companies.
A former bank executive said to me recently that “he hasn’t invested in bank shares for years and at the bank he felt like he was sitting on a time bomb with core legacy IT systems.” He said that everyone knows they cannot continue like that for long, but it is scary to start to replace systems where most people have their money. New systems might offer better services for lower costs but he is not brave enough to take those steps, because something might go wrong.
New regulation, for example GDPR and PSD2 in Europe, have demonstrated how hard it is to live in the digital era with legacy IT systems. For example, banks should be able to provide data to their customers, but how they do it is not very modern. An executive from another bank told me how they employ someone to manually collect data on an Excel sheet, when someone asks to get his or her data, and then email it to the client.
This is very different from the big public talks about open API banking.
In practice we have also seen that IT departments are typically very skeptical about accepting any new systems, even though top management and business leaders would like them to. Someone could say they are conservative and against change but there are also very practical reasons for this. They have a hard time managing the existing systems and typically it has been hard to get the legacy systems to talk to each other. Each new system has meant expensive system integration projects.
Generally, it is hard for incumbent companies to change and change their operating models. That’s why disruption has happened in many industries and new companies have emerged to kill the old companies. In some cases, the old companies have survived, but most of the new business has gone to the new players (for example media companies, telco carriers and bricks and mortar retailers).
But are there some ways to make the transition. There are no simple solutions, certainly no miracles, but we can suggest some things that can help:
That said, there are some softer ways to handle the technological change, but even with those models it is fundamental to keep the focus on customer value, not on internal development.
Your focus must not be to develop IT, but your customer value and experience.
The articles first appeared on Disruptive.Asia.
Cold war era command center (Photo: Wikipedia).
Over the past year, Robocorp has been quietly building open-source tools and a cloud-native platform with the vision of making Robotic Process Automation (RPA) more easily accessible to any company and not just the giant corporations on the Fortune 1000 who benefit from it today.
Today, Robocorp announced it has raised $5.6 million in our first round of institutional funding, led by Benchmark, with participation from Slow Ventures, firstminute Capital, Bret Taylor, President and Chief Product Officer of Salesforce and co-creator of Google Maps, and Rob Bearden, CEO of Docker. Additionally, Benchmark’s Peter Fenton – who has backed numerous successful open source companies from JBoss (acquired by Red Hat), to SpringSource & Zimbra (both acquired by VMware), to Elastic (IPO'd last year) – is joining the board of directors.
With the new funding, Robocorp is now ready to accelerate its growth and take the next step toward democratizing RPA. The RPA industry has seen incredible growth in just the past 2-3 years, with large corporations already benefiting from the automation of millions of routine business tasks, ranging from onboarding new employees to processing insurance claims. But for all the benefits RPA has brought to businesses, it has only been able to help a sliver of the market due to the prohibitively high costs associated with these proprietary tools and the lack of a proper developer ecosystem.
Ultimately, Robocorp's goal isn’t to just disrupt the RPA tool market, but instead it wants to create a whole new industry that they call robosourcing. Currently, companies looking to gain efficiency and cut costs outsource functions to low-cost regions around the world. In the near future, what will happen is that instead of transferring this work to remote regions, companies will employ robot developers who will automate the work in-house instead. Outsourcing work to robots, or robosourcing, will be a driving force to increase efficiency, reduce errors, improve employee satisfaction, and deliver better customer experience.
Looking ahead to what’s next, with this new funding the company is expanding its operations by tripling its workforce to scale the vision of an open-source RPA ecosystem by creating tools that developers across the world will use to automate tasks. This is a great opportunity to participate in one of the most interesting and fastest-growing enterprise software market at the moment. Robocorp is also hiring people to help it grow the developer ecosystem and create content around the open-source RPA ecosystem.
Read more at Robocorp web site.
See open positions at Robocorp.
Robocorp is set out to change Robotic Process Automation. RPA has the potential to change how millions of people work every day and Robocorp is making it accessible to everyone through open-source technologies, delivered through a cloud platform.
RPA is the fastest-growing segment of the global enterprise software market and we are disrupting it in technology, business model, and ecosystem.
Robocorp is based in San Francisco and Finland. We are actively hiring top software engineering talent to work with us on remote-first basis.
Read more on Robocorp career site.
San Francisco, October 15 2019 – Difitek has appointed Ronald J. Buschur as Chief Executive Officer of the company. Mr. Buschur will work directly with Jouko Ahvenainen, Chairman of the Board and other senior management of the company. Mr. Buschur is an experienced leader, having lead Powerwave Technologies (Nasdaq) global operations and thousands of employees around the world and an experienced entrepreneur, having taken companies from initial stages to the public markets. Mr. Buschur has been an executive advisor to Difitek Inc. since 2016 in its growth in digital finance.
Mr. Buschur comments the new position: “Having seen the growth and working with the company in the digital finance market since an early stage, I’m honored to lead the company to its next phase. The market demand is strong and the company has significant, technology and expertise in the global fintech market and as the industry matures and customers expect better digital finance services, we’re looking forward to offering cloud based finance back office and engine to the market.”
Mr. Ahvenainen comments: “I’ve worked with Ron in different roles and have seen firsthand his expertise and business acumen. Global fintech adoption is at a key moment, where solutions to drive customer value are being taken to market. Finance institutions are looking for more cost-effective solutions to offer better services to customers. We’re excited about supporting our customers and partners seize these opportunities in the financial markets.”
About Difitek Inc.
Difitek provides the leading finance engine for digital finance services. It has powered many financial marketplaces in real estate in the US and Europe, in access to capital for individuals and small businesses in South East Asia and new forms of financing in South America.
More information is available at the company website: www.difitek.com
For further information, please contact:
Ronald Buschur, CEO
+1 714 414 9820
Photo (from left): Markus Lampinen, Co-founder & Board Member, Jouko Ahvenainen, Chairman, Ron Buschur, CEO.
It was maybe two years ago when I was first in discussions about data becoming a liability to companies. Until that time it had only been seen as an asset. This thinking is becoming mainstream and is really changing the behavior of companies. The masterminds that were devising models to get more data five years ago are now concentrating on how to make services that come without ‘data liability’ or are simply creating entirely new data models.
A Google search now reveals several articles about data as a liability and I have raised the subject with many significant tech and consumer companies in Silicon Valley. One very significant company has even told me how they are systematically deleting information that is not directly linked to their core business. Some other companies have mentioned how they had earlier offered data as a bargaining chip to get good deals with other companies. But they have now seen this no longer working for them and many are avoiding collecting data because of the potential liability attached to it.
We are still in a watershed moment; some businesses and business leaders are still in the old paradigm that they want to get more data and believe it is key to their business. But the most advanced companies are finding new ways to get value and new customer relationship models so that they can minimize their liability yet still get value from customer knowledge and also find a fair data relationship with their customers.
These changes and new models are not always easy to explain to the old paradigm people. They might think that the only way to use the data is to have it in their own hands. Of course, new data regulations first in the EU and later, for example, in California or New York will also accelerate this change and understanding. However, it is not easy to understand different models that utilize data if you don’t have the basic knowledge of data science and an understanding of software business models and how software is written, used and distributed nowadays.
Data traders and brokers are the first ones to really suffer from this change. It is not only that companies have become less willing to buy data generally, but the reputation and image of the data trading business has suffered significantly. There are many good reasons for this and we can say that not all of those companies have been ethical or transparent in their business – sometimes with operations in a ‘grey’ area.
There are at least three models to handle data in a new way:
Some ICO companies have introduced models where people could own their data and then sell it in return for some tokens. This model’s most relevant point is that people could get value from their own data, but in reality, it is very hard to get this kind of market to actually work. The idea of data exchanges and markets is looking quite dead. During the 25-year history of Internet services, we have seen many market place ideas that have not worked in real life. The personal data exchange model is probably one of those.
It is relevant that people get fair value from their own data, but it most probably comes in other formats not necessarily suited for sale in an open market place. And how do you price your data? Can you sell it for one-time use only? Some have compared it to selling one’s own organs, and I can see the point in the comparison.
The key for new data models is to find new customer relationship models. How people can get value from their data in daily situations. The value can be better experiences, better prices and more relevant services. The company must be able to serve the customer better, if the customer shares data in the transactions. Technology, including AI, offers many new ways to achieve this.
Changes take time. Most automobile companies are still making combustion engine cars that are driven by human beings, although everyone knows the future belongs to self-driving electric cars. No serious carmaker can ignore this future and they must also invest in these future cars. It is the same in the data business, many companies must still manage their old model data, but they must prepare for the future of the data business that is much more distributed and customer driven.
The article first appeared on Disruptive.Asia.
Read more about new user-centric data models at Prifina.
Fintech has made quite a lot of headlines, at least in startup publications this decade. But we can still say that actual changes in the finance industry have been quite insignificant and even the new technology, or fintech, has only played a small role – so far. Most changes have happened on the outer peripheries rather than the core. When and how should we expect the big changes to happen?
A new research report Fintech 50 lists the top 50 fintech companies and fintech growth during the last five years. We can see there are some success stories, but if we look at those numbers and companies, we can conclude, fintech hasn’t yet been a threat to traditional finance institutions. Square and Stripe are the top companies on the list, they exist mainly to handle payments. They represent new technology and make payment solutions more cost effective. They are also services for processing transactions rather than actual finance services.
Other companies on the list include also new credit scoring, trading and money transfer services. They are also very transaction-oriented. We still have quite limited changes, e.g. in saving accounts, wealth management, real estate finance, lending and investing services. Robo-advisors is a category that has seen much more talk than real business.
We have heard many reasons why it is so hard to change the finance sector, from regulation to a need for a strong balance sheet, risks and conservative customers who guard their money. But as we know, in many industries big disruption often takes more time than visionary early-adopters expect, but it then comes and maybe in a bigger way than expected. We have seen, how long it has taken the big disruption in retail to really happen.
If we try to think what has been successful in fintech and new finance services, it has been services that are very simple and straightforward to ordinary people. Services to make payments easy, services to transfer money or get small loans when you need them. We can never underestimate, how important convenience is to consumers. It is more important than price, which is also very important.
We have also seen that some new exciting things get traction, but it can be for a short time only. If the value, usability and comprehensibility are not in place, people abandon the services quickly. We have seen equity crowdfunding, ICOs, robo-advisors and P2P lending getting a lot of attention, but the services haven’t been able to offer enough value or they have been too complex to understand or use. There are many reasons for this such as being too complex to understand the real value; difficult to evaluate the services themselves; even bad services and complex finance products or asset classes.
One very significant problem with new finance services is when too many compromises are made, when the services haven’t been disruptive enough. Some finance professionals can challenge this argument, and say you can make new finance services, only if you know the old services well enough and build new products based on that knowledge and experience. But if you do in that way, you just add new stickers on old services, or maybe add some web and mobile functions, but you don’t go to change the fundamentals of the services. The successful online retailers or media services haven’t only added a web services to order items or watch content, but they have build the whole company and operation on moderns digital operations, logistics and models.
If we simplify this real disruption point, we should not expect real new disruptive finance services from London, New York or Singapore, but from San Francisco, Berlin and Shenzhen. They are not built by former bankers, but by software-oriented risk-taking entrepreneurs that are ready to challenge old models, take risks and convince risk taking venture capitalists.
Many technology solutions in fintech have been based on traditional fundamentals, like centralized solutions that also utilize many old finance world concepts and systems. Although blockchain has suffered from the ICO bubble, it is a model and technology that can offer tools to really change the finance world. Blockchain and distributed ledger solutions generally are also developing behind the scene rapidly. It will be to find the balance between totally wild distributed models and how fast the regulation can develop.
What can we expect in fintech during the next few years? Here are some predictions:
The article was first published on Disruptive.Asia.
Read more about technology solutions for fintech services at Difitek.
Est. 2009 Grow VC Group is building truly global digital businesses. The focus is especially on digitization, data and fintech services. We have very hands-on approach to build businesses and we always want to make them global, scale-up and have the real entrepreneurial spirit.
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