The Effect of Disruption on traditional Financial Services Models

Susanne Chishti, CEO

FINTECH Circle www.fintechcircle.com

Fin-Tech 2014 Conference: Modernising Financial Services 9 October 2014 – Edinburgh

Do Banks underestimate the danger from FinTechs?, WSJ 3 Oct 2014

FINTECH Conference

Banking Conference

Which side are you on?

FINTECH Reports & Resources

Disruptive Technologies Examples

• Data & Analytics – collect diverse range of financial data on individuals, corporates and particular market activity ie credit reference

• Platforms – P2P platforms, trading and personal wealth platforms, aggregators

• Payments – online/mobile, FX transfers

Mobile NFC tokenized payments at point of sale

Mobile phone and POS terminal manufacturers have a compelling reason to integrate NFC into their devices now.

Challenges for established Players

• Technology as double-edged sword

• Existing IT infrastructure (legacy systems, …)

• Cost-cutting

• Tougher capital regime leads to drop in revenues

• Regulation (high compliance costs, changes ..)

• Little room left for disruptive technologies

« They all want to eat our lunch! »

Jamie Dimon, CEO, JP Morgan Chase

Cooperate with FINTECH Firms

Emergent FINTECH

Small, innovative firms with disruptive technologies

Accelerator Programs

Venture Capital Funds

Traditional FINTECH

Large tech firms supporting the financial services sector

Existing close partnerships with IT vendors

Tech Giants

Apple, Amazon, Google, Facebook, PayPal etc

Example:

Launch Apple Pay in US

Will they enter banking?

Peer to Peer (P2P) Lending

• UK one of the fastest adopters with more than 40 platforms

• Provide loans and early-stage growth & working capital to over 5,000 start-ups and SMEs (2011-2013)

• Disruptive Model => Dis-intermediation of Banking

Investors

Banks

Businesses or

Consumers

P2P Platforms

But business model is changing ….

• In the US, 80% of loans originated through two biggest P2P lenders (Prosper and Lending Club) are bought by institutional investors rather than the individual investor who once dominated

• While dis-intermediation was original goal, biggest players are teaming up with Wall Street

Investors

Banks

Businesses or

Consumers

P2P Platforms

Securitize loans

Innovative Partnerships are Key

Example: Santander & Funding Circle

Contacts

Susanne Chishti, CEO

Email: susanne.chishti@fintechcircle.com

uk.linkedin.com/in/susannechishti/

@FINTECHCircle

www.fintechcircle.com