Digital Banking 21

Startups

Dear all,

if you go out for dinner tonight and one of the conversation topics may be the startups phenomenon – maybe this is not what you are considering for an appealing dinner talk. If this is the case, you better read this post - www.fastcompany.com/3052607/the-future-of-work/the-state-of-the-most-influential-startups-on-earth -, that will provide you with an overview of startups world state-of-the-art …and plenty of data the other dinners are unaware of.

One of the data that has called my attention is that capitalization of the largest unicorns - 140 of them - is still below Apple market value. Apple has presented results this week; it has broken records worldwide and across all industries. Everyone focus on the headlines, but I haven’t found any analysis of the drivers. Forget this Q revenues and try to have a longer term vision. Watch the evolution of the past 10 years.

I am struck by profit growing faster than revenue, hence its efficiency ratio should have been substantially improved. They take care on where and how they spend their money. I accessed their web page today and they have ~ 6 product lines for a 7 billion people market - are we so different from each other after all?. As simple as that.

But back to the world of startups, back to this subset called Fintech, where I wanted to share with you two things:

• The post, http://bankinnovation.net/2015/10/6-takeaways-from-sibos-2015-in-singapore/, which has some thoughts to reflect on ... though the primary one should be that, even the differences between Fintech offerings is endlessly fascinating to a few of us in the business, to most people the only interesting thing is how to get all that money stuff done as quickly and cheaply as possible so that one can do something more interesting.

• An infographic on the digitization of banking by Efma, which contains many interesting details. And it has called my attention that there are 1,900 financial apps in the iTunes App Store beginning with the letter “A”.

And I would love to end today with something spectacular. We heard about it a couple years ago. The future is here. http://www.fastcoexist.com/3052540/will-sweden-be-the-first-country-to-get-rid-of-cash

Have a nice week

Digital Banking 20

Skepticism

Dear all,

Here is a statement I read some weeks ago: "Digital has created and destroyed industries, bankrupted major corporations, enriched tiny startups and completely altered how we behave and interact with one another".

OK, I agree. Lovely. But now let's put the light of skepticism on some of this world common statements:

• “Develop an app and you will be in the digital arena” ... however your target audience will likely not know it exists; if they do, probably they will not download it; and if they have downloaded it, what are the chances they are using it? ... welcome back to the “old” concept of Change Management or how to make people know, desire, install and use your app. Wow … and it turns out to be more complicated than developing the app itself. I remember when we started with internet banking, not so long ago ... ... and our own employees did not even use it ... how they were supposed [or expected] to recommend it to customers. What did we do well? What did we do wrong? What can we apply today?

• “Financial institutions have embraced the digital innovation movement” ...let's be frank with ourselves, as customers of financial institutions - and custs of more than one financial institution - and ask ourselves what innovation we have received from our financial institutions – www.bankinnovation.net/2015/10/reality-does-not-match-perception-in-banking-innovation/ - .... What most institutions are succeeding at deals with digitizing their processes, not digital innovation ... complying with what someone wisely described to me as the "market regulation" - the biggest "regulator" is the market ... or you digitalize your processes or you are out of the market.

• “We are living in a bubble of Fintech companies, that - although they can affect - will eventually burst?” ...analysts predict that over the next five years 85% of fintechs will be gone. No brainer ... and I reckon they fall short in the figure of the fintechs that will be gone with the tide... but do not underestimate the remaining and the change itself. The Internet bubble also burst out ... but what did really explode? Those first companies? Or the phenomenon? ... Internet changed us forever ... for your delight: www.recode.net/2015/05/27/mary-meekers-2015-internet-trends-slides/

• “The role of branches in a digital society will evolve towards offering higher value-added services” ...quite likely, but still avoiding to speak aloud of the greatest impact of digital on branches and current staff... drastic reduction. The best I've read lately: http://www.fool.com/investing/general/2015/10/07/chart-bank-of-america-is-closing-branches-as-mobil.aspx. And this leads me to the following reflection: Fintech are not "disrupting" banks, but the banking operating model. The biggest danger for incumbent large banks are not the fintech, but the incumbent small / medium bank that are willing and able to embrace digital …even taking the painful steps.

Wish you all a great weekend.