The fourth wave of the Fintech sector: Technology, Disruption and Demand
Digital disruption as the foundation of the Fintech sector
What is fintech? What has led to the boom in this industry and what are the most important trends? With the aim of enabling students to update their knowledge and develop the latest competences, on 27th March, within the framework of EAE’s Focused Program, the lecturer, Founder of ELSEBITS and startup mentor, Marc Sansó, gave a webinar entitled “Key factors of the Fintech sector”, which expertly covered the main points of the Fintech industry.
With dozens of students taking part, the conference primarily focused on the most relevant aspects of digital disruption in relation to the Fintech sector. “Fintech is basically the digital disruption of the finance industry. The exponential disruption brought about by technologies”, explained the lecturer.
He emphasized that this digital disruption has generated huge transformations within the world of finance as a consequence, with the most important changes including the shift in the conceptualization of competitiveness, which is no longer seen from the viewpoint of supply, but rather from the perspective of demand.
“Within contemporary market competition, there is a rise in the customer assessment model, in which the customer is the focus of everything and the data that they generate are the foundation of the business model”, explained Sansó. He went on to highlight other important changes with respect to competitiveness and which help us gain a better understanding of the Fintech sector, such as the growth of winner-takes-it-all economies and companies being subject to combined flows of incremental cycles and disruptive cycles.
The lecturer then spoke about the history of the relationship between technology and finance. Before discussing the 4 waves that comprise this history, he explained that “in recent years, technology has shifted from being simply a back-office matter that with the sole purpose of facilitating operations to become a concept associated with selling more. Nowadays, technology is seen as an augmented relationship with the customer: hyperconnectivity, microtargeting, etc.”.
He then listed the following 4 waves:
1995 – Digital Wave: shift from analogue to digital.
2010 – Important Disruption Wave: changes in retail, transport, hospitality. Greater volume of users.
2015 – Fintech Industry Wave and Positioning: Significant advances in telecommunications, rise of 5G, artificial intelligence and big data.
2020 – Process of disruption of complex industries, with large impact on the economy: Transport, healthcare, manufacturing, energy, etc.
Sansó emphasized that disruption is a natural process that results from the will to prevent the decline of an industry or company. “Nobody sees Apple as just a computer company, but rather as something much broader and comprehensive. That is how disruption creates growth in industries, by transforming and expanding” explained the lecturer.
In terms of the trends shaping contemporary Fintech, he highlighted the following:
The battle of the deposits
Fintechs focusing on regulatory compliance
Southeast Asia as a hotbed of Fintech activity
The next Ant Financial and We Chat Pay
Lack of Fintech IPOs
New kinds of conversion platforms and assets
The continued lack of Fintech M&As by the banks
Fintech and the real estate sector merge
Boom of the Fintech impact
Unpackaging financial services
Moreover, the startup mentor underlined the fact that the disruption of finance is a result of the intensive implementation of technology, but emphasized that it is also due to a profound change in the different dimensions that comprise competitiveness, such as the customer experience, company culture, business model, organization, processes, leadership, capacities and infrastructure.
Towards the end of the session, Sansó spent a few minutes discussing the prevailing business models in the modern Fintech sector:
Multichannel businesses (Banks): faultless experience throughout the channel. They know the customer’s key needs.
Ecosystem (Internet retailers, hardware manufacturers): Focus on a superior customer experience. They sell their own and third-party products.
Suppliers (cars): selling offers to suppliers, subject to commoditization.
Modular products (payment services): plug-and-play offers, innovators
Lastly, he listed the main components that comprise the Fintech ecosystem:
Startups: An approach focusing on innovation and being disruptive.
Regulators: Adaptive response to changes. Typically, they are a step behind the market.
Traditional financial institutions: Reactive response to changes. Approach: divestment in channel, resistance to change. Technology used to improve relationship with the customer.
Customers: Hyper-segmented. Technology seen as a multidimensional value proposition: experience, cost reduction.
Technological developers: Key technologies: data analytics, blockchain, artificial intelligence, cloud-based and social/mobile.
As we can see, the Fintech sector is not only a complex industry with great potential, but it is also constantly growing and searching for new technologies that enable it to remain one of the most important branches of the global economy.