Fintech Lenders: Strategies to Compete or Partner
•Télécharger en tant que PPTX, PDF•
4 j'aime•592 vues
Baker Hill Client Meeting 2016: Fintech Lenders: Strategies to Compete or Partner with the New Players in Banking presented by Mike Horrocks
Recommandé
Recommandé
Contenu connexe
Tendances
Tendances (20)
En vedette
En vedette (17)
Similaire à Fintech Lenders: Strategies to Compete or Partner
Similaire à Fintech Lenders: Strategies to Compete or Partner (20)
Plus de Baker Hill
Plus de Baker Hill (20)
Dernier
Dernier (20)
Fintech Lenders: Strategies to Compete or Partner
- 1. FinTech Lenders: Strategies to compete or partner with the new players in banking Mike Horrocks- Sr. Director, Solutions Management
- 2. “BE FEARFUL WHEN OTHERS ARE GREEDY AND GREEDY WHEN OTHERS ARE FEARFUL” WARREN BUFFETT
- 3. Agenda What is FinTech? Disruptions created by FinTech Why we you should care about FinTech? FinTech and lending business Strategies to manage FinTech disruptions Questions, Answers, and Discussion
- 5. 1950 – Credit Cards
- 6. 1960 – ATMs
- 7. 1970 – Electronic Stock Trading
- 8. 1980 – Personal Computers
- 9. 1990 – Online Banking
- 10. Today – FinTech User-friendly and high quality service Mobile and responsive Social networks and financial networks
- 11. What is driving FinTech? Trends towards growing trust in online transactions Increasing consumer expectations of immediacy The proliferation of public data for risk scoring
- 13. a match of borrowers and investors for both risk & duration a borrower experience, driven by speed & convenience an ability to use public data to an advantage in scoring risk a fundamentally lower-cost operating model FinTech advantages (or at least perceived)
- 14. Notion of big data: analyse and capture value from large and complex data sets Traditional Bank FinTech - Basic credit scoring based on long term relationship - Information collected through various modern channels - Other kind of FinTech will be able to generate additional data Big data
- 15. Existing Regulation New economy means new regulations Innovation makes the traditional financial system more complex and opaque
- 16. Investment in FinTech 2000 $447 M 2013 $677 M 2014 $1.2 B Global Investment In FinTech • Global investment has tripled • Banks are the first one to be affected by the growing popularity of FinTech • Every department is threaten
- 17. Why you should care
- 18. of respondents expect a life event in the next 36 months that will significantly impact their finances 60 % Source: 2016 FIS PACE Index July 2016 The Financial Brand
- 19. The primary financial institution is the first choice for funding anticipated life events… …however, 19% of banked consumers have not yet decided where to turn to finance these events Source: 2016 FIS PACE Index July 2016 The Financial Brand
- 20. Millennials ranked being digitally connected higher than reliability and transparency… …and they make nearly 2xthe number of online transactions as Gen Xers or Baby Boomers Source: 2016 FIS PACE Index July 2016 The Financial Brand
- 21. of smartphone users could list one feature/service they would want their bank to provide via mobile app 50 % Source: 2016 FIS PACE Index July 2016 The Financial Brand
- 23. The FinTech Lending Landscape Marketplace / Alternative Lenders Crowd Funding Peer2Peer Lending Providers
- 24. Marketplace / Alternative Lenders Development of algorithms and use of Big Data Faster respondent to technological changes ~ Digital Generation More transparency are required by clients Banks may still have an advantage in this sector, but for how long ?
- 25. HOW MARKETPLACE LENDING WORKS 1 2 3 4 BORROWER CHOOSES A PORTAL &CHOOSES A LOAN TYPE BORROWER POSTS A LOAN LISTING ONLINE A LOAN OFFER MAY TAKE ONLY MINUTES INVESTORS REVIEW & SELECT LOANS LOAN FUNDING CAN TAKE LESS THAN A WEEK THE MARKET- PLACE LENDING PLATFORM SERVICES THE LOAN BORROWER REPAYS LOAN IN MONTHLY INSTALLMENTS
- 26. Just how big is MarketPlace Lending? $0 $5,000 $10,000 $15,000 $20,000 $25,000 2011 2012 2013 2014 2015 US MPL Annual loan volumes, US$ million 2011-2015 Lending Club Prosper SoFi OnDeck Avant Other Source: Direct Lending: Finding value/minimizing risk, Liberum, 20 Oct 2015, p.6 $473 $1,529 $4,114 $10,653 $22,732 CAGR: 163.3%
- 27. Businesses using MPL Aware? Used? 76% aware 24% unaware MPLs 94% not used 3% lent 4% borrowed
- 28. Crowdfunding Allow projects that maybe can’t get a bank loan to benefit from external financing Straightforward selection of risk and projects More transparent for lenders
- 29. Peer2Peer Lending Challenging the core activity of a bank Putting in relation borrowers with many lenders based on their risk aversion Big Data is used for a more precise risk profile more efficient credit selection process Faster collection and treatment of the information Biggest challenge for the banking industry Credit Selection Process
- 31. Play your advantage Cost of funds – Attract deposits Relationships with regulators Infrastructure
- 32. Strategies to disrupt FinTech Partner with existing vendors. Develop structures that encourage internal innovation. Work with other institutions to benefit from economies of scale. Mimic what works best for others.
- 33. Partner with existing solutions Partner, Buy, or Build Leverage new innovations Monitor and learn Respond to change
- 34. Royal Credit Case Study Member Business Lending on their website Rapid deployment timelines Nearly 50% of all MBL applications came from the channel User satisfaction SLA’s – 96% within targeted SLA 700 applications for $35 million in MBL growth
- 35. Encourage internal innovation. Hackathons Encourage “what if” Foster a culture of innovation
- 36. Berkshire Bank – Fostering a new culture America’s most exciting bank Why is the bank changing? What is the reaction in the bank? What is the reaction of the market?
- 37. Work with others for economies of scale. Partner with: – Incubators – Local businesses – Trusted vendors – Universities
- 38. Focus on what your borrowers want 20 40 60 80 100 Safety Security Fairness Reliable Transparent Control Customized - Importance - Performance
- 39. Mimic what works well for others Replicate elements of the UX Enhance a bank’s overall customer proposition Capture more of the value inherent in the brand
- 40. Call to action… Set goals for collaboration Push for transparency in processes Foster the needed cultural changes
- 42. THANK YOU
- 43. Optimize,Change, Innovate #BHCM16 @bakerhill For more information, visit our Solutions Showcase, or, contact your presenter at Mike.Horrocks@bakerhill.com
Notes de l'éditeur
- The 2015 BAI Retail Delivery Conference in Las Vegas from October 13-15 presented a mix of discussions around old, established technologies in need of a makeover, and new, unproven technologies looking to create value for both financial institutions and their customers. Through all the sessions, one key theme emerged time and again: traditional banking and digital banking business models and technologies are converging. As a result, many large traditional banks are building internally or investing and partnering externally with FinTech innovation labs. With all the buzz around successful innovation labs, firms often ask us whether they should be investing in similar FinTech initiatives – and if so, how? While financial institutions certainly should focus on innovation and new technology, the hype around innovation labs often exaggerates the benefits. While innovation labs may be a great investment for large firms, for many institutions, the ROI of developing one’s own innovation lab simply isn’t worth it. Instead, firms must explore the best way to engage in FinTech by first establishing with internal stakeholders what they are trying to accomplish, and how much they are willing to invest towards that objective. Leading firms recognize that there are many ways to encourage innovation without the investment of an Innovation Lab: Partner with existing vendors to stay aware of relevant technology. For some firms, the best tactic is simply to partner with their existing vendors to keep abreast of innovations worth watching. This is ideal for smaller institutions whose goal is to monitor and respond to new technologies. Develop structures that encourage internal innovation. For others, the solution may be to carve out a small group of internal staff to work in a cross-department task force to solve specific challenges. These groups have the benefit of being lower-cost, and can drive a more innovative culture across the firm. Work with other institutions to benefit from economies of scale. Meanwhile, those with more resources might find benefit in working with other FSIs and vendors to create a shared lab. This structure provides all the benefits of a full innovation lab, while allowing firms to achieve economies of scale that they could not accomplish alone. As FinTech expands and new solutions arrive, firms will continuously need to balance between traditional banking and these new technologies. The BAI Conference proved that banks are thinking about these challenges, and are ready to incorporate new technology into their traditional systems.
- - For these reasons, we believe that banks will have a structural cost advantage over MPLs if and when the credit environment normalize
- Partner with existing vendors to stay aware of relevant technology. For some firms, the best tactic is simply to partner with their existing vendors to keep abreast of innovations worth watching. This is ideal for smaller institutions whose goal is to monitor and respond to new technologies. Develop structures that encourage internal innovation. For others, the solution may be to carve out a small group of internal staff to work in a cross-department task force to solve specific challenges. These groups have the benefit of being lower-cost, and can drive a more innovative culture across the firm. Work with other institutions to benefit from economies of scale. Meanwhile, those with more resources might find benefit in working with other FSIs and vendors to create a shared lab. This structure provides all the benefits of a full innovation lab, while allowing firms to achieve economies of scale that they could not accomplish alone.
- Partner with existing vendors to stay aware of relevant technology. For some firms, the best tactic is simply to partner with their existing vendors to keep abreast of innovations worth watching. This is ideal for smaller institutions whose goal is to monitor and respond to new technologies. Develop structures that encourage internal innovation. For others, the solution may be to carve out a small group of internal staff to work in a cross-department task force to solve specific challenges. These groups have the benefit of being lower-cost, and can drive a more innovative culture across the firm. Work with other institutions to benefit from economies of scale. Meanwhile, those with more resources might find benefit in working with other FSIs and vendors to create a shared lab. This structure provides all the benefits of a full innovation lab, while allowing firms to achieve economies of scale that they could not accomplish alone.
- Royal goal is 24 SLA 96% 700 apps for 35 Million for MBL
- Partner with existing vendors to stay aware of relevant technology. For some firms, the best tactic is simply to partner with their existing vendors to keep abreast of innovations worth watching. This is ideal for smaller institutions whose goal is to monitor and respond to new technologies. Develop structures that encourage internal innovation. For others, the solution may be to carve out a small group of internal staff to work in a cross-department task force to solve specific challenges. These groups have the benefit of being lower-cost, and can drive a more innovative culture across the firm. Work with other institutions to benefit from economies of scale. Meanwhile, those with more resources might find benefit in working with other FSIs and vendors to create a shared lab. This structure provides all the benefits of a full innovation lab, while allowing firms to achieve economies of scale that they could not accomplish alone.
- Partner with existing vendors to stay aware of relevant technology. For some firms, the best tactic is simply to partner with their existing vendors to keep abreast of innovations worth watching. This is ideal for smaller institutions whose goal is to monitor and respond to new technologies. Develop structures that encourage internal innovation. For others, the solution may be to carve out a small group of internal staff to work in a cross-department task force to solve specific challenges. These groups have the benefit of being lower-cost, and can drive a more innovative culture across the firm. Work with other institutions to benefit from economies of scale. Meanwhile, those with more resources might find benefit in working with other FSIs and vendors to create a shared lab. This structure provides all the benefits of a full innovation lab, while allowing firms to achieve economies of scale that they could not accomplish alone.
- First, we think it is clear that banks should seek to replicate elements of the UX being delivered by leading MPLs, particularly on the borrowers’ side of the marketplaces. They should prioritize those asset classes and use cases where UX has the most weight in influencing customers’ purchasing decisions. Second, we think that providing customers with transparent access to MPL-originated funds (when a customers’ requirements are outside the bank’s risk appetite) would be a sensible step. It would enhance a bank’s overall customer proposition and, structured properly, provide an opportunity to capture more of the latent value inherent in its brand, physical distribution network and existing customer relationships.