by: Grow VC Group
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Digital Finance and FinTech are rocketing. With investments in the sector quadrupling from $3 billion in 2013 to $12 billion in 2014, all signs indicate this growth has continued throughout 2015 and that growth is actually accelerating. As consumers we can see some signs of this, but there is much more behind the scenes, things that will change the whole finance sector.

Digital finance services can be divided into 5 categories:

  1. online and mobile access,
  2. mobile payments and money,
  3. digital currencies and transactions,
  4. digital finance infrastructure, and
  5. digital finance instruments.

The first one is the most traditional category, for example, access to web bank or an online trading tool. We are still in a waiting mode with mobile payments. Apple Pay is getting more users and other players like Google and Samsung are also getting active too. But progress is still slow and for consumers it is also a question, why should I use my mobile for payments if I can use my contactless credit or debit card, when I anyway need that card.

Digital currencies, especially bitcoin, have got a lot attention. They have also got more acceptance, so that some regulators have started to treat them as a commodity. But they are still in an early phase and not for mainstream users. Now there are signs the transaction and data model behind bitcoin, blockchain, is more important than bitcoin itself. Blockchain is not tied to Bitcoin. It or similar models can basically be used to record all kinds of digital ownerships and transactions. Its de-centralized model can even question the role of banks in many financial services. And it can also offer a new way to handle digital investing and lending services, as well as different kinds of digital agreement processing and deposit servicing.

Digital finance infrastructure includes many components. It has the most important impact on the whole value chain of the finance sector. It means, for example, online investing, equity crowdfunding and p2p lending services. The SEC just ruled that basically anyone can invest in equity crowdfunding in the US and the UK has been the fastest growing market in these services. Much more is happening in this area. Digital back offices, with user registrations and accounts, user background checks, payment solutions and other needed components with open APIs, make it easy to develop this kind of services. Data aggregation and analytics services help investors and enable new kind of value added services. Wealth and portfolio management services bring a new service layer to their users.

The last category is new kinds of digital finance instruments. It can mean, for example, a fund type service where an investor can define, how he or she wants to invest their money and diversify their investments. The system can then take care of this and use a lot of market data to make investment decisions, with no high management fees for fund managers.

When we put together, for example, a digital finance back office, blockchain, online investing and lending platforms, data service with portfolio management, we basically start to have all components needed to have a full set of digital banking services. They can be de-centralized so that there is not a single bank and central database that manages all this, but a full set of services from different service providers the user can control what he or she wants to use for different needs. This development is already happening, but due to regulation, legacy systems, high reliability requirements and customer adaption, it will take a few years and come step by step. Digitalization is changing the finance sector fundamentally and especially making it more effective, transparent and accessible to anyone.

The article is originally published in TelecomAsia Vision 2016.

Digital Finance API Ecosystem

Vision 2016: FinTech - TelecomAsia




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Grow VC Group The Grow VC Group is the world leading, global pioneer of securities crowd funding, peer to peer marketplaces, new investment models and global business development. Established in 2009, the Group has developed new investment models on six continents and continues to innovate the global market.

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This entry was posted on Wednesday, December 30th, 2015 at 2:00 pm and is filed under Business Updates. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.