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Fin·tech noun : an economic industry
composed of companies that use technology to
make financial markets and systems more
efficient.
The traditional FS landscape is being disrupted by
new entrants leveraging technology to deliver new
services in more relevant and convenient ways to
consumers and businesses
WHATWHY WHO WHERE WHENHOW
Fintech Disruptors: Friend or Foe?• Why should we be focused on Fintech?
• Who the key fintech companies and are they are enabling or disrupting?
And what makes them successful?
• Enabling? Blockchain, Backbase
• Disrupting?
• How are they impacting FIs?
• What challenges and opportunities do they present?
• Where can FIs take action to adapt their business, product and marketing
strategies to address the challenges and leverage the opportunities the new
FS landscape presents
• When is the right time?
$9 bn
Ubiquitous
data
Technology
innovation
Falling cost of
computing and
IT services
Financing activity
in the US grew by
200%, up from
$3bn in 2013 to
$9bn in 2014.
Growth in Fintech
is being driven by
a convergence of 6
key trends.
should Fintech be a key focus for your organization?The Fintech sector is experiencing rapid growth
Changing
customer
behavior - advice
from peers,
willingness to
adopt, and
expectations of
exceptional service
Digitization of
financial
services The need for
cost reduction
WHY
Emerging Fintech Markets
should Fintech be a key focus for your organization?Fintech is no longer a scattered collection of small companies… it is now
an emerging sector of the FS landscape
~ 30% of
all global investment
Growing at
31% CAGR
5yr CAGR was
2x global avg
$1.5b
$600m
$66m
Silicon Valley/San Francisco12,000 FTEs
New York43,000 FTEs
London44,000 FTEs
Annual Fintech Investment
Top 3
Fintech
Markets Silicon Valley New YorkLondon
Sydney
Singapore
Hong Kong
Berlin
Atlanta
WHY
WHO
Payments Lending
Personal
&
Business
Finance
Crowd
Funding
Crypto-
currency/
Blockchain
Capital
Markets
are the Fintech players?Fintech companies vary by market and cover a wide range of sub-industries. San
Francisco alone is home to hundreds of Fintechs
WHO
Payments Lending
Personal
&
Business
Finance
Crowd
Funding
Crypto-
currency/
Blockchain
Capital
Markets
are the local Fintech players? Are they enabling or disrupting?
Disruptors
Enablers
are they impacting Community banks?Fintech is unlikely to replace banks altogether, many Fintechs rely on existing bank accounts
To mitigate the threat of Fintech insurgents, traditional banks are exploring a range of strategies, including, closing bank branches to cut costs, investing in
digital servicing and acquiring Fintech companies
HOW
Community Bank Strengths
challenges do they present? Foes?
WHAT
Approval rates of small community banks have fallen over the past year from 50.6% to 49.2% while big banks continue to increase their approval rates
* Biz2Credit’s Lending Index
appeal of big banks is with Millennials, Minorities and Emerging Affluent
Big banks do best with Millennials, Minorities and Emerging Affluent
challenges do they present? Foes?
WHAT
72% of
millennials would
like to bank with
non banks like
Google and Apple
Consumers now
interact with their bank
15-20x a month,
up from 3-4 times in
the pre-digital era
Millennials are the largest
cohort and in 10 years they
will be the wealthiest
71% of
consumers
believe their
relationship with
their bank is only
transactional
67% of
millennials
want their FI to
provide tools
& services to
create/manage
a budget
Over 50%state that they’d
rather lose a finger or their sense of smell
than their smartphone
Community Bank Strengths Opportunities
trusted financial experts
opportunities do they present? Friend?
WHAT
can Community Banks take action?WHERE
So where can community banks take action to adapt their business, product and marketing strategies to address the
challenges and leverage the opportunities of the new landscape?
can Community Banks take action?A lesson from Life Sciences
WHERE
trees grow taller than others to allow them reach the sunlight - an adaptation critical for survival
Shorter plants have adapted their behavior to allow them to live in the shade with less sunlight
growing to reach the sunlight adapting to do more with less
develops a behavior that makes it more likely to survive
Comfortable with technology View branch employees as trusted financial experts
Liberty Bank of IL focusing on technology with its Simple Debit Plus Visa account: no checks, billpay, e-statements, P2P money transfers + customized photo of local images
advice on budgeting and setting financial goals
financial seminars
to take action: Reaching for moreMillennials
WHERE
Lending Enhanced Tools
alternative data and machine learning
predictive ‘mosaics’ to determine creditworthiness
shares its proprietary BizAnalyzer score
sophisticated pricing strategies
to take action: Reaching for moreAnalytics
WHERE
Secure Chat – Tangerine Bank Video ATM & Chat
to take action: Reaching for moreRevive lost conversations in the digital banking world
WHERE
Middleware: Blockchain:
to take action: Doing more with lessOperational Efficiency
WHERE
Community banks gain inroads with the fintech world
Community banks help startups test their products
Collaborative partnerships that enable community banks to access attractive lending markets
to take action: Doing more with lessPartnering
WHERE
is the right time? The time to act is now
WHEN
Today’s emerging business models are tomorrow’s challenges and opportunities
Progressive financial services firms are tracking this changing landscape
They are identifying which Fintech companies are foes and present a competitive
threat and which are friends, bringing partnership opportunity
They are exploring how they can prepare themselves for the future from strategy to
operations
Strategy Target Design Enable OptimizeAnalyze
PRODUCTS & INNOVATION
A business and technology consulting firm with offices in North America and London
Local model.Global results.
Combining strategic insight
and technology know-how.
3,500+EmployeesSeattle, WA
Headquarters
17 marketsOffices in
2001Founded in 750+
Clients
Slalom’s industry-focused professionals
work with an impressive set of local,
national and global Financial Services
and Fintech companies to understand
the threats and opportunities that Fintech
companies bring to the banking
landscape.
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