Fintech - CIOs as venture capitalists

Article

Financial technology (Fintech)

CIOs as venture capitalists

Executive Summary

Financial technology is following the model of many successful start-ups in the services industry: one does not need to own a product or a service to improve it, or to build further services around it.

For instance, Uber is the world’s largest taxi company and owns no vehicles, Facebook is the world’s most popular media owner and creates no content, and Airbnb is the world’s largest accommodation provider and owns no real estate.

Something interesting is happening. The world of financial services IT start-ups is currently so vibrant that it has been given its own name: Fintech.

Introduction

Start-ups and tech-savvy individuals now have a chance to shake up the business model of wellestablished financial institutions. To leverage this new channel of technology evolution and disruptions, CIOs should now shift from the traditional buyouts towards cooperation. There are several ways to go about cooperating with these new players and they are often far from the vision of large financial institutions. CIOs can prepare their organization to deal with future trends by looking at Fintech companies from a venture capitalist point of view.

In recent years, huge mergers and acquisitions in the field of technology have taken place. A widely known example is the acquisition of Whatsapp by Facebook for US$19 billion. Whatsapp did not emerge from a large organization that wanted to revolutionize the world of digital communication. It was instead created by two former colleagues who identified an area for improvement that would benefit from the support of wider innovations such as the Apple App store and the new wave of smartphone applications.

Fintech start-ups are no different from Whatsapp in its early years. While the core business of banking and financial services is clear, the digitization of these services creates a large margin for improvement that is not always visible from an insider’s point of view. Fintech start-ups benefit from their proximity to end users and an external view of the industry. There are many reasons for CIOs to pay attention to the Fintech industry. There are even more reasons for them to do so quickly.

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Inside magazine issue 10, October 2015

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

PDF - 8.8 MB

Events:

Fintech insight - Deloitte Digital Series
Digital disruption of financial services in Luxembourg
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