Digital Disruption and Fintech

Digital disruption and Fintech:
Hype or Hope?
Malik khan Kotadia

LinkedIn: Malik khan Kotadia
Email: [email protected]
Copyright: Finnovation Labs 1

Amara’s law

Myth 1:
I am too big to fail.

I am deeply entrenched in my customers’ life…

“If I had asked people what they wanted,
they would have said faster horses.”
- Attributed to Henry Ford

From there to now… in just a decade..

Microsoft video

Myth 2
Yes, digital is disrupting,
but my industry will not be significantly impacted

Source: Digital vortex
by Cisco and IMD

Myth 3
I am already innovating, so I don’t
need to worry…

To address this myth,
Let’s time travel to the ‘90s…

You’ve got mail video

Web 1.0: A day in our life…

To NOW: Web 2.0: winners of the new era…

But many didn’t make it…

Myth 4
My industry is regulated, so I am
protected…

Perhaps not…
Source: The fight for the customer – McKinsey Global Banking Annual Review (2015)
Financial Institutions Innovation capability ranking...
• Alibaba #1
• Ripple # 5
• Tencent # 6
• Fidor # 7
“The biggest risk to the finance sector

today is not from other banks…
[but from] the growing gap between the
institution and the customer…”
Source: Why Banks Are Failing the Innovation Test
- Brett King And how they could do better ;[report from: The
Disruption House, 150 FIs studied, focus on 65 FIs]
So, Risk or opportunity for
incumbents?
Both…depends on you…

Fintech 1.0: 2009-2015
Fintechs will kill the bank…

LARGE US BANK :
BEING
CANNIBALIZED
BETWEEN
STARTUPS.
Source:
https://www.cbinsights.com/blog/disrupting
-banking-fintech-startups/

Source: fintechnews.hk
FinTech drivers- WHY
2008 crisis and subsequent Huge un(der)banked
trust deficit population
Explosive growth of mobile Millennials

and smartphones • Digital natives
• Impatient
Slow response times,

legacy systems High fees, opaque
ecosystem
Exponential growth in Emerging technologies:

Venture funding cloud, APIs, ‘talent’
marketplaces

The FinTech Continuum… HOW
Enabling
Improve existing Transformational
processes, enable better Disruptive
Transform fundamental
CX business models AND/OR
Introduce newer revenue Fundamentally disrupt
Egs: models existing business or
• Gamification- PFM engagement models
Egs:
• Big Data
- P2P lending
• Video KYC Egs:
• Co-browsing - Robo advisory
- Social payments - Blockchain
- Biometrics - BAAP (banking as a
platform)

But the response of
(most) incumbents…

WFWIB to confusion to FOLO to FOMO….
WFWIB: CONFUSION: FOLO: FOMO:

• ‘Why fix what • Not sure what’s Fear of losing out Fear of missing
ain’t broken…’ happening • Sit up and take out
• At what pace… notice… • Bandwagon effect

Fintech 2.0: 2015-18: Banks + fintechs
driven by FOMO and the platform economy..

From pipes to platforms: Today’s leaders own/ create nothing…
Most popular media owner created no content
Largest company owns no cars
Most valuable retailer has no inventory
Largest accommodation provider owns no rooms
Largest photo sharing provider doesn’t create any images
Largest communication service owns no telecom infra
Largest breaking news service produces no news
29
Copyright: Finnovation Labs
There is enough room for Banks + Fintechs…
Venture funding in Fintech
• Crosses $ 25 Billion!
Alternative Lending:
• > 300 Billion SME credit gap in APAC
• Projected to grow to $ 600 billion in the US alone by 2025
Payments
• Remittances: $ 700 BN
• US P2P payments projected > 100 BN
Roboadvisory:
• Projected to cross $ 2 trillion by 2020
Blockchains:$ 180 BN valuation across tokens

• Bitcoin valuation: $ 90 billion
• Ethereum: $ 18 billion
31
Unfortunately, this is how
(most) incumbents still see digital

transformation and Fintech partnerships…

Source: Instyle.co.uk
Source: fotostrana.ru

Fintech 3.0: Open banking
From competition to ‘co-opetition’ in

an open ecosystem…

Competition? Co-operation? Co-opetition?
Incumbents Fintechs
• Strengths: • Strengths:
– Large customer base – Speed and leaner processes

– Resources – Flexible, scalable architecture
– Regulatory understanding – Low overheads and cost base
• Weaknesses: • Weaknesses:
– Legacy platforms – High CAC
– Legacy culture – Relatively weak compliance and

infosec

Banking-as-a-platform/service
Key principles:
• Open Standards based APIs for

developers.
• Open Data options for

transparency.
• Open Source technology

- source: open bank
Image Source: Marvelstone

Data is the new oil…
Leveraging the
unprecedented deluge
of structured and
unstructured data…
Source: excelacom
The emerging ‘landscape:
‘Ecosystem banking’ and TechFins
Non traditional players: GAGAFANGTUP

Google, Amazon, Grab, Apple, Facebook, Ant,
Netflix, Go-jek, Tencent, Uber, PayTm…

Commerce and F.S increasingly driven through ‘ecosystems’…

Source: CB insights
Tencent:
Leveraging large base to offer ‘fin-services’…
Wepay and WeBank: Leveraging WeChat: >650 MILLION ACTIVE USERS

ANT FINANCIAL: Mybank and ALIPAY
• 500 M+ monthly mobile active Alipay users
• Total payment volume: $ 500 BN +
• > 80 million transactions per day

Source: https://mybank.cn/index.htm
43
Mary Meeker’s 2016 report:
WeChat payments > USA debit + credit card trxns

The emerging ‘Glo-cal’ giants…
Ant Financial Tencent
Sanook and Ookabee in

Lazada
Thailand
Kakao Pay-Korea Gojek-Indonesia
Ascend Money-Thailand Hike- India
PayTM, India ZALO messaging: Vietnam

E payments license in
Zomato- India
Malaysia
Mynt- Philippines
Emtek- Indonesia
M-Daq- Singapore
Compare Asia- online
insurance

In an era of cognitive and M2M transactions,
What will be the role of the bank?

‘Cashless’ and ‘waitless’ commerce: Alibaba Hema…

Platform/Ambient ‘Banking’…(clue: spot the bank)
49
Ultimately, its about human needs and
emotions…
TD bank video

THANK YOU!
Malik Khan Kotadia

LinkedIn: Malik Khan Kotadia
Email: [email protected]

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Digital disruption and Fintech:

Malik khan Kotadia

Copyright: Finnovation Labs 1

Copyright: Finnovation Labs 2

I am too big to fail.

Copyright: Finnovation Labs 3

- Attributed to Henry Ford

Copyright: Finnovation Labs 4

Copyright: Finnovation Labs 5

Copyright: Finnovation Labs 6

Copyright: Finnovation Labs 7

Copyright: Finnovation Labs 8

Copyright: Finnovation Labs 9

Let’s time travel to the ‘90s…

Copyright: Finnovation Labs 11

Copyright: Finnovation Labs 12

Copyright: Finnovation Labs 13

Copyright: Finnovation Labs 14

Copyright: Finnovation Labs 15

“The biggest risk to the finance sector

Copyright: Finnovation Labs 18

Fintechs will kill the bank…

Copyright: Finnovation Labs 19

Copyright: Finnovation Labs 21

Explosive growth of mobile Millennials

Slow response times,

Exponential growth in Emerging technologies:

Copyright: Finnovation Labs 23

Copyright: Finnovation Labs 24

Copyright: Finnovation Labs 25

WFWIB: CONFUSION: FOLO: FOMO:

Copyright: Finnovation Labs 26

driven by FOMO and the platform economy..

Copyright: Finnovation Labs 28

Blockchains:$ 180 BN valuation across tokens

(most) incumbents still see digital

Copyright: Finnovation Labs 32

Copyright: Finnovation Labs 33

From competition to ‘co-opetition’ in

Copyright: Finnovation Labs 34

– Large customer base – Speed and leaner processes

– Legacy platforms – High CAC

– Legacy culture – Relatively weak compliance and

Copyright: Finnovation Labs 35

• Open Standards based APIs for

• Open Data options for

• Open Source technology

Image Source: Marvelstone

Non traditional players: GAGAFANGTUP

Copyright: Finnovation Labs 38

Copyright: Finnovation Labs 39

Wepay and WeBank: Leveraging WeChat: >650 MILLION ACTIVE USERS

• 500 M+ monthly mobile active Alipay users

• Total payment volume: $ 500 BN +

• > 80 million transactions per day

Copyright: Finnovation Labs 44

Sanook and Ookabee in

Ascend Money-Thailand Hike- India

PayTM, India ZALO messaging: Vietnam