Worldwide it is Technological developments are accelerating exponentially, New technologies are discovered and new products launched almost every day.
This trend will accelerate because:
Become people all over the world educatedand give more people the opportunity to participate in the advancement of science and technology
Companies realize more and more that the only way to do this Competition has to be innovated, This means that the budgets spent on research and innovation increase from year to year.
The Developing countries like India and China (each with more than 1 billion inhabitants) offer an almost unlimited pool of qualified resources
Several Tools support progress in research and development, e.g.
The Internet Facilitating the exchange of ideas, facilitating communication, reducing travel time …
Open source initiatives: This new type of collaboration that started in the software industry is gradually being extended to other areas, such as:
Open Compute Project: an open source data center and hardware architecture launched by Facebook
BiOS: in biotechnology
Cloud computing: Providing almost unlimited computing resources for everyone and avoiding large upfront investments by new companies in hardware (significantly reducing the cost of starting a new start-up)
Machine learning (AI): Providing new insights into large data sets that cannot be processed by humans due to the enormous volume.
Keeping an eye on all of these developments is almost an impossible task (unless you focus on a niche), let alone keep pace with the implementation of these new technologies.
Almost all large companies and above all traditional financial services companies clearly cannot follow this pace, Aside from some smaller new players and some smaller (often marketing stunts) projects at larger financial institutions, the
The predominant technology for processing financial transactions dates back to the 1990s, and even these technologies are not fully exploited. For example, banks worldwide should be able to implement with the technology introduced 20 years ago real time
international payments, Instead, national payments can be delayed by more than 24 hours, while simple international payments can take several days and cost a fortune in transaction costs.
While financial services companies complain a lot about that increasing compliance and legal restrictions These government-imposed regulations are actually the real obstacle for large technology companies not to flood the market.
Companies like Facebook, Google, Apple and Twitter can easily link a checking account to their customer accounts and make international instant payments in real time. The implementation costs would not be very high.
Since most of the technologies are present in your system (e.g. authentication, international message exchange, ensuring the delivery of these messages …). Instead of sending likes or tweets, the message would be money.
Fortunately for traditional financial services companies, these protesting legal restrictions and the different localities of the same regulations prohibit these large tech companies from taking this step.
However, the question is whether these restrictions can continue to form a sufficiently high barrier.
Initiatives like Bitcoin and Ethereum are already bypassing existing financial systems and even legislation. Governments around the world are trying to get this under control, but the decentralized nature of these networks makes it very difficult for them
To protect their market share, Financial services companies urgently need to transform, At the beginning of the Internet age, financial service providers were at the forefront of innovation and were one of the first industries to offer them
Rich internet applications for their customers. Over the years, almost all financial services companies have lost their innovative character to the (fin) tech industry.
Young, dynamic IT graduates tend to stop working for a bank. If financial services companies want to survive, they need to understand that IT is their core business, and they must therefore view IT as a key focus area and not as a cost center that can
can be optimized through extensive outsourcing. The CEO of BBVA (Francisco Gonzalez) understood this 5 years ago (in 2015) when he claimed that BBVA was a Software company,
To achieve this transformation, banks need to implement the practices and methods that have been in place for large technology companies for several years. H.
Organize in small (2-pizza, i.e. 8-10 people) men, Who can work independently (Free from bureaucratic processes). This means that the teams form independent units, regardless of a large hierarchy
Structures and multiple boards of directors. These teams should be free to choose their own technology stack and experiment with new technologies.
Decentralization of part of the budget allocation (most of it has yet to be allocated to major strategic initiatives) so these teams can work out small technological and business improvements as they seem
Work in one real agile approach, i.e. Step-by-step provision of features instead of the existing waterfall or semi-agile approaches, i.e.
Imagine DevOps principlesi.e. the small teams above should have the freedom to deliver regularly to production and be responsible for operating their deliveries
Implement a Micro Services ArchitectureThis enables parts of a solution to be easily exchanged and facilitates the independence of small teams
If established banks can only implement part of these measures, Competition among fintech neo banks will be negligible, The existing customer base, extensive expertise in banking and risk management, local and personal touch, full product
The size and scale advantages of most large, established banks give them enormous competitive advantages over neo-banks. Tech can be fun, additional features, but for most people, trusting their money is still the most important decision-making factor
where you deposit your money.