by: Grow VC Group
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Recently I had the privilege to discuss changes and macro trends globally in different industries with a group of change management executives. While we discussed various topics, including incumbents abilities to innovate in new markets, cannibalization among other topics, we got talking about the changes of financial services institutions becoming the new effective ‘bit pipes’ (comparison from telco’s) and more so, if this is actually a bad thing?

To take a step back, the telecom sector went through a change where telecom operators largely provided the infrastructure which was both low margin yet difficult, cost-intensive and expensive to maintain and new innovators (think Skype) came into provide services on top of this infrastructure. And more often than not, these innovators would provide the high margin services sought after by clients effectively dis-intermediating the telco and cementing the telco’s position in the background.

With the requirement and trend toward open APIs of financial services and core financial products, a similar type of dis-intermediation is in effect in financial services. Further than that, it seems together with macro trends such as declining consumer sentiment toward banks and new innovations in the customer experience, financials services firms are being pushed farther and farther into the background.

Change is inevitable and all markets move toward greater efficiency, or so the sayings go. The ultimate beneficiary of progress in markets is the end user and in financial services this is visible in various ways, including a more modern way of attaining services such as wealth management and core banking, to more pressure on prices and competition in specialist services such as foreign exchange, transfers and payment services.

Business also face various complexities beyond new positioning, least of which comes with timing in a new market. Particularly when faced with difficult choices of cannibalization of existing business lines and competing on costs with new innovators, the question of when to act can be paramount in optimizing opportunity and potential lost revenue from existing business lines. Too early can be devastating, but too late can come at a high alternative cost (and down the line real cost) of failing to establish organizations as relevant let alone thought leaders in new markets.

Regulators and policy makers also have to adapt to new changes, which comes with the need for understanding what the market is and what it is not, where it is going and which growth opportunities it presents. Confusion and uncertainty cause friction in markets and consistency is what the ecosystem looks for in the policy makers approach. We recognize this is often a difficult and multifaceted task, yet the actions regulators are taking (for example with the financial services sandbox initiatives around the world) make it clear this is in fact a new paradigm and not business as usual.

Beyond a discussion of whether or not this development is good or bad may almost be redundant, as it’s a matter of opinion. Yet it’s now apparent, that the trend is in fact in full swing and proceeding what ever we may think about it. It comes with its growth challenges, and presents various areas of opportunity for organizations looking at creating more modern end user services to underserved segments in the market.

Read the whole article at Crowd Valley News.

money pipes


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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 Friday, June 17th, 2016 at 4:00 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.