7 Key trends in the P2P lending industry to prepare for
Photo by Maciej Pienczewski on Unsplash
Author: Vit Arnautov, Chief Product Officer, TurnKey Lender
According to Statista, by 2025 the P2P lending market is going to be worth 1 trillion dollars while just in 2015 it stood shy at 64 billion. The industry develops astonishingly fast and it’s not just hype (unlike Bitcoin in 2017). I believe the reasons for lenders and borrowers to switch to P2P are logical and pragmatic, which is exactly why the market will keep growing. As a Chief Product Officer at TurnKey Lender, a company that creates intelligent lending automation solutions, I have to stay alert to any new trends and developments and I’ll be happy to share what I foresee for the P2P lending industry in the near future.
1. More small to midsize lenders will enter the game
For many, the rise of the P2P model opened the doors into the world of financial services. Nowadays, it costs less than ever to get into the lending niche. No need for enormous investments and staff. Even the regulations aren’t as complex as the ones conventional banks go through.
This means that the old-school financial institutions now have a swarm of smaller and hungrier online competitors. But despite being small, the new P2P lenders often provide better service due to recent advances in lending technology and fully automated lending processes.
2. Banks don’t intend to give up
Large institutions have a harder time adjusting to the realities of the digital world and it takes them a ton of time to change their gears. But the boards of directors do see market trends and understand the need to go P2P. Slowly but surely banks worldwide start to introduce P2P functionality.
One of the pioneers in this regard was the N26 direct bank which struck a partnership with auxmoney, a German marketplace lender. Another example would be Monzo with their new peer-to-peer functionality. As of now, it’s mostly digital banks who are willing to start offering peer-to-peer lending. But the old-school banks also have to adjust as they go through their own digitalization. And it’s not just a theory. A prime example would be the Royal Bank of Scotland. All the way back in 2015 the company started to formally refer clients to Funding Circle and Assetz Capital for p2p loans. We can also look at two community banks, Titan Bank and Congressional Bank, who are buying loans through the Lending Club platform.
Traditional institutions often choose to develop their own solutions instead of using and customizing the existing and tested products that are already on the market. This route takes more time, the systems often turn out slow, clumsy, and not user-friendly. This means that only the banks with a more agile approach will adapt to the market to compete against the light-on-their-feet competitors.
Keep in mind, that for many people big banks still bring a sense of security and reliability. So in the nearest future small and midsize lenders will need to work a little harder and to market a little more aggressively to prove to the customers that they are every bit as good or even better. But P2P lenders are already doing really well and the big players in the field show that the success if very real to attain. Here are some growth stats of some of the leaders in the field:
- Lending Club – In Q4 of 2017 the company had issued $33.6bn in loans, while in Q4 of 2018 they were already at $44.5bn.
- RateSetter – The company announced that their 2017 to 2018 revenue growth reached 47%.
- Funding Circle – As of September 2018, Funding Circle has issued £6.3bn in loans. To reflect upon its growth the company has gone through an IPO.
3. Financial inclusion for underbanked areas
Take the two previous points into consideration and you’ll see that the market wins when a ton of smaller lenders compete with big banks. The loan prices go down and the businesses do their best to reach the previously underbanked areas and demographics. Global financial inclusion is the overarching goal of all the responsible members of the lending community and this competition serves this purpose perfectly.
The lending software providers create better solutions to process more of the right loans safer and faster and the lenders try to tap into new markets and demographics. For example, the AI-powered models used by Upstart (a p2p lending startup by ex-Googlers) result in 75% fewer defaults and 175% more approvals than those of traditional banks. The smart approval processes allow serving the people who were previously underserved in addition to providing a more flexible and fast online experience.
4. More markets and jurisdictions
The more governments see that P2P lending works, the more of them make it legal and start to work with it as they work with other financial instruments. Just last April the Central Bank of Brazil authorized P2P lending across the whole country and new governments join in all the time. For example, in Malaysia authorities introduced a P2P scheme for first time home buyers and in the US peer-to-peer lending is recognized and regulated by the SEC just as well as other financial instruments.
Some countries even go the route of Australia where financial startups can work without a license for a year which is called creating a FinTech sandbox. Jurisdictions that used similar mechanisms to stimulate the growth of the FinTech sector include UK, Switzerland, and Singapore.
5. Regulations
Don’t expect P2P lending to be the new “Wild West” where lenders can do whatever they want without any consequences. Governments have learned the lessons uncontrolled ICOs taught them.
In addition, authorities have seen China’s bitter experience of letting P2P function without sufficient control. There it led both to drastic growth and to dramatic fall of the industry. So in 2019 more governments won’t only allow and encourage P2P lending, but will also come up with specific ways to control the niche.
FinTech is still very young and governments often have troubles figuring out how to work with it and regulate it. But it’s safe to say that in 2019 the authorities will be far more focused on P2P lending. No one is really arguing that P2P lending is a good thing which should be allowed and encouraged. But at the same time, there are many influential voices who call for proper regulation, which is not necessarily a bad thing. As long as the rules are written to realistically reflect the state of the market and technology, any regulation should only do good in protecting both lenders and borrowers. Some examples that already apply come from the UK, with the ongoing updates from the Financial Conduct Authority to regulatory framework related to the P2P lending market. Also, in Canada, peer-to-peer lending is regulated under the same laws as securities. And in China, the government’s reaction to the meltdown of the industry was to tightly regulate the niche and weed out any wrongdoers before letting it grow any further.
6. The go-to choice for younger audiences
In Europe, over half of the P2P market is comprised of people aged 22-37. That’s no news that young people don’t want to deal with stuffy corporate organizations and choose the more user-friendly and up-to-date options when they can.
In addition to that young people often simply can’t get a loan on decent conditions from conventional lenders. Mostly since they simply don’t have the financial background baby boomers have. So the trend of young borrowers preferring the P2P lenders will continue.
7. Fiat currencies prevail in 2019
For a while there it looked like every FinTech project needed to hold an ICO. P2P lending was no exception. But the trend is down for the best.
Either the public wasn’t ready for such a drastic shift of the paradigm or the technology and concept weren’t solid enough. Anyhow, it looks like we’re over ICOs for the time being. Even though projects may still effectively use blockchain as data storing and operating technology, there will be fewer crypto coins and more dollars and cents.
Final thoughts
It’s a great time to be in the P2P lending business. Not only are there still 3 billion unbanked people around the globe with no credit bureau score, but the technology we have makes it possible to get in the game without the huge investments. Now more than ever, all it takes is an entrepreneurial spirit and an idea.
A Meeting of Coins!
Blog by (Prof) Christine Bamford Founder Women’s Coin
For readers who didn’t know ”¦
Scotland is the first country in the UK (possibly Europe) to be home to 2 global digital currenciesWomen’s Coin and Scotcoin! How cool is that!
It can’t be a consequence that 2 digital currencies have emerged from Scotland. It’s the foresight of the Scottish Government, Scottish Enterprise and Fintech Scotland as a hub for innovation in financial technology. Not to mention active support for emergent technologies by Kate Forbes, Minister for Digital Technologies. Who I think is just fab!
Left: Kate Forbes, Minister for Public Finance & Digital Technology, (Prof) Christine Bamford and Dr Jane Lewis, Women’s Coin
Fintech Scotland, Napier University and other key stakeholders such as Virgin Money, Zortrex, Money MatiX, CU Apps and Payment Centric were so welcoming that we decided to establish Women’s Coin here in Edinburgh. There is no doubt that Scotland makes stuff happen and has a real entrepreneurial spirit.
So how did we connect with Scotcoin? Well it’s all down to Fintech brokering service. It took a couple of meetings to establish a trusted relationship but now we feel that there is power in a collective approach
Temple Melville, Director. Scotcoin commented “There was synergy between our coin offerings and a mutual desire to move towards a ICO (initial coin offering) through a legal regulated framework” Dr Jane Lewis, Strategic Director, Women’s Coin added “We have a track record in successful partnership working – So it made sense for us to explore how we might jointly raise our profile and collaborate on trading”
What is Women’s Coin? It is a digital currency for women (& men) with a humanitarian arm using blockchain to deliver charitable giving to the point in need without third party intervention. Every time you use women’s coin payment you support another woman to survive in the most hostile environments on earth. Supporting United Nations SDF 5 (Women’s Empowerment) A coin with a heart
See website http//womenscoin.com
Scotcoin does what is says on the tin. A digital currency for everyone ”“ anywhere!
To celebrate “Coin Collaboration”Fintech supporters will be invited to learn more about our “Coins” blockchain and crypto currencies during September Fintech Festival 9th-27thSeptember
Innovative fintechs awarded place on acclaimed growth programme
Nine innovative fintech businesses have been selected to take part in Addleshaw Goddard’s prestigious growth programme, AG Elevate.
Senior fintech lawyers at the leading international law firm will provide mentoring and legal guidance to the nine high-growth businesses and start-ups, worth a total of £500,000.
Fintech firms Amiqus, ARQ, Autopaid, Finance Unlocked and Finvisage are among those to be awarded a place on this year’s AG Elevate after submitting successful applications earlier this year.
They will be joined by OBR-Open Banking Reporting, Pionr, Trace and Tumelo on the prestigious growth programme.
Fiona Gosh, a partner and head of fintech at Addleshaw Goddard, said: “The AG Elevate programme was founded in 2017 to support ambitious fintech start-ups across the globe and help them overcome the complex regulatory and legal challenges businesses can encounter as they scale up.
“Fintech firms are some of the most disruptive and innovative businesses we see in the market. Helping the very brightest achieve their full potential is something we’re tremendously passionate about, and that’s why the AG Elevate programme exists today.
Dave Anderson, a partner at Addleshaw Goddard who specialises in working with technology companies, said: “This year we’ll be working with a fantastic array of earlier stage fintechs, all of which are bringing interesting innovations to the financial services industry that will shake up business practices and offer greater quality and choice in the market. Addleshaw Goddard enjoys a reputation for excellence in technology and financial services, and the industry-leading advice we provide will help ensure our chosen fintech companies can overcome the regulatory hurdles they will encounter on their path to growth.”
The chosen businesses will be allocated assigned mentors to provide the equivalent of 25 hours’ free legal advice covering funding, payments, financial regulation and technology.
Members will also receive access to Addleshaw Goddard’s legal seminars, legal updates, networking events and TORCHLIGHT online tool, which helps users track future regulatory developments in the financial services sector.
Addleshaw Goddard has a dedicated Fintech and Payments team with more than 30 senior lawyers and recently exhibited at the Money 2020 Fintech conference in Amsterdam. The firm was recognised as one of the top tenMost Innovative Law Firms’ in Europe at the 2018 Financial Times Most Innovative Lawyers Awards.
For details on how to apply for next year’s AG Elevate programme visit: https://www.addleshawgoddard.com/en/ag-elevate/programmes/apply/
Fortnightly FinTech Fuse ”“ Action Packed Fintech Community!
This has certainly been another action packed few weeks with the fintech community as the financial innovation continues at pace across Scotland.
What makes meeting with the amazing fintech community of firms so exciting is the diversity of action orientated entrepreneurs across the country.
This was very much the case on Wednesday evening with our community FinTech Scotland Fusion evening in Edinburgh.
Action Packed Entrepreneurs
Awesome spotlight sessions from fintech entrepreneurs Daniel of Listing Ledger, Tynah from Money Matix, Adam from Sage City, Dave from The ID Co and Bhairav from Avrium to a very engaged audience.
Once again it was a wonderful buzzing atmosphere of fintech talk, all magnificently overseen by our very good friend and seasoned entrepreneur Aleks Tomczyk.
Big thank you to Kirsty Irvine and Ewan Fleming of Johnston Carmichael for their great hosting of the evening and being such fabulous supporters of the fintech community.
It was a more formal format but just as action packed for the two Fintech Practitioners meetings we held in Glasgow and Edinburgh in the last fortnight.
A great range of conversations on key topics from funding to commercialisation to people development with a spectrum firms from across the fintech community.
Some really key actions from these meetings for FinTech Scotland which we will follow through with the FinTech Network Integrator team at Vivolution and Scottish Enterprise.
Thank you to our strategic partners Anneli at Dentsu Aegis and Yvonne at Pinsent Mason for hosting these valuable meetings with the fintech community.
Prior to this, we had the opportunity to share some of the fintech developments with Government Minister Kate Forbes at Scottish Parliament, who takes a keen interest in the fintech innovation.
The meeting gave us the opportunity to mark the fact that the Scottish fintech community is now over one hundred innovative firms in Scotland.
Fantastic to have some of the newer fintech firms Xpand Access, CU Apps, Womens Coin, Money Matix, Zortrex join us for fabulous session at Parliament along with the fast growing team from Amiqus.
Later that week I really enjoyed catching up with James Gumble to hear about the terrific innovation development by the Xpand Access team, playing a huge role in demonstrating the value of innovation and collaboration.
Another wonderful example of this is from the team at Soar who have recently won the Scottish Edge award, big congratulations to entrepreneurial Andrew Duncan and colleagues.
Similarly, with my catch up on Tuesday with the terrific Rab Campbell of Wallet Services as we plotted how to extend the entrepreneurial action across a range of collaboration initiatives. Thanks for the much need almond biscuit Rab!!
Action Packed Collaboration
The action packed collaboration was very much alive with the fintech community and a diverse range of participants at the European Innovation and Technology event at University of Edinburgh this week.
Brilliant action sessions as always from exciting entrepreneurs Loral from Sustainably and Phil Gillespie.
This was alongside hearing from the engaging Kate of Sainsbury Bank, David from Lloyds Bank and Anurag of Baillie Gifford on their approach to fintech collaboration.
Also joined by Damien from University of Edinburgh to share insights on the crucial role of academia as part of team Scotland in developing fintech.
Great to work with our European colleagues Fergie Miller in delivering the event to a full house and super enthusiastic audience.
This European collaboration also came alive when we hosted a fintech day with fifty executives from the large French bank, Banque Populaire a week or so ago expertly organised by Mickael.
Terrific sessions in sharing their innovations from James of The ID Co, Chris from Nexves, Jim of Renovite and Laura from Amiqus.
Many thanks also to Mark Curran of CYBG for joining us as well to share the fast moving open banking developments with our French friends.
Earlier this week, we were delighted to work with Kevin and the SDI team and Erin Ellis and the World Congress Team in hosting a trade mission of seven fintech firms from Toronto.
Wonderful to hear from the exciting Canadian entrepreneurs and their interest in working in Scotland and becoming part of our vibrant community
It was great to bring them together with some of the Scottish community such as entrepreneurs Bryan Eldridge of Qwallets and Nick Jones of Blockstar at an engaging session with Simon and the IBM team.
This was followed by a super reception at Bute House, home of the First Minister, hosted by Minister Jamie Hepburn.
Global collaboration opportunities are stretching far and wide. It was brilliant to meet up with the inspiring Radoslaw Szmit and Kamil Kwecka of CShark Ventures to discuss the mutual opportunities in Scotland building on their great expertise from Europe.
Thank you also to Kent Mackenzie for inviting me to share the fintech collaboration opportunities with the Deloitte Global Digital Council members recently, great to have the engagement and support.
The global interest in Scotland is certainly growing and it was great to meet with Martin Rueda from fast expanding London fintech firm Iwoca recently and share how the Scottish community is developing.
This was also the discussion with Avere Hill of Singapore fintech firm Cynopsis as well as Andrus Alber, the founder of Bankish from Estonia, both of whom we look forward to seeing in Scotland very soon
Similarly, when meeting up with Consul General Andrew Jackson from the UAE Embassy this week to discuss the potential international trade opportunities for Scottish firms building on the success of firms such as Qpal and IceFlo in this region
Thank you to Hamira Khan and Grace Glass for setting up.
The global opportunity was one of the key themes for the event at Scottish Parliament earlier this week on the plans for the exciting new Scottish Stock Exchange
Always inspiring to hear from Tomas Carruthers who is leading the initiative and also meet up with team making Project Heather come alive such as Edwin Hamilton, Michelle Thomson and Martha Walsh.
The event was also valuable in catching up with some key friends from across the broader ecosystem in Scotland including David Clarke of SIFI and Frazer Lang of SABE as well as media guru Terry Murden of Daily Business
Action Packed People Events
Events with action packed people has certainly been a major theme this last fortnight.
For example, thank you to Nicola Anderson who expertly took the platform recently for FinTech Scotland at the recent SFE event on cyber security
Another example was the impressive Digital Scotland conference in Glasgow a few weeks ago and it was a privilege to be invited to participate on the stage with so many brilliant speakers.
I really enjoyed our afternoon session with the awesome Cat Leaver of Brand Scotland and fabulous Melinda Matthews of CodeClan along with the wise heads of Gerry McCusker and Donald McLaughlin.
Thank you to expert leadership chairing by Alisdair Gunn and super engagement by Hamish Miller, Will Peakin and the super Future Scot team
This carried on to the weekend when I was asked to contribute to the Executive Women Leadership Programme at University of Edinburgh with the fabulous Maeve Gillies and Jacqui Gale on Saturday.
Thank you to the wonderful Judy Wagner and Susan Murphy for the opportunity to join many great leaders such as Sam Bedford, Clare Carswell and Ailsa Sutherland amongst many others.
On the subject of people inspiration, it was terrific to meet up with the brilliant Dr Susie Mitchel and Laura Bell who are leading on the CanDo Innovation Summit plans for Glasgow later this year.
We are delighted to be involved with the Future of FinTech session which will showcase a number of people from across Scotland leading on financial innovation.
This is something I shared with the brilliant chair of FinTech Scotland, David Fergusson this week as we talked about the plans for the coming months and longer. I always value the insight feedback from these sessions with David.
Last week I had the pleasure of sharing the progress of the fintech innovation being driven by a diversity of people in Scotland with Executive Chair Ian Campbell and Bob Martin of Innovate UK.
The engagement with senior figures from across financial services is so important to FinTech Scotland taking forward its plans and it was excellent as always to have a catch up with Philip Grant and of Lloyds and Colin Halpin of HSBC this week.
Action Packed Innovation
On Wednesday I very much enjoyed meeting up with the brilliant Kristen Bennie to hear about the action pack innovation with fintech community across RBS.
We are delighted we will be working more closely with Kristen and the team on this in connecting with the innovative activity across Scotland and wider.
Another example of driving this action packed innovation is the plans with Sopra Steria and University of Edinburgh to develop a new fintech accelerator programme.
Very much value the great ongoing strategic support of Craig Wilson and Rob McElry from Sopra Steria on this
This last couple of weeks has seen a number of strategic meetings with organisations looking to support and engage with the breadth of fintech innovation across Scotland.
For example, we very much enjoyed the conversation with Alex Foster, Michael Woodman, Daniel Thomas at BT on the mutual innovation opportunities.
Thank you, Craig Muirhead, for arranging and we are looking forward to progressing your relationship with the fintech community
Similarly, great to catch up this week with Kevin Spence and Gary Fegan to consider potential strategic innovation actions we can work on together with Fujitsu.
Action Packed Running
Action packed running has also been a theme over this last couple of weeks after the Edinburgh marathon.
This has included a challenging trail race in Denny near Falkirk on a Thursday evening as well as a fabulous 10km race at Kirkintilloch on a perfect summer evening this week.
Both of which have helped me up my pace along with my fastest Parkrun race of the year last Saturday!!
All of which I am hoping will produce a faster marathon time in July when this race comes along in a few weeks time.
In the meantime, it is the Glasgow 10km race on Sunday through the glorious city which is always so special and a father’s days treat for me! People certainly do make Glasgow. Until Next time!
Keeping up with digital lending in 2019-2020
Photo by Philip Veater on Unsplash
Blog written by Vit Arnautov – Chief Product Officer at TurnKey Lender
Customers become more and more demanding. Especially as millennials become a bigger fraction of the financial products’ users, businesses should be prepared to work for their loyalty. The onboarding process for getting a new vendor of anything gets so easy that lenders can’t stay still. There are market trends no one can ignore and here are the ones lenders worldwide should take into account.
AI and machine learning
For lending niche, artificial intelligence and machine learning aren’t just hype words anymore. Neural networks are the real deal and lending businesses globally already use them to make credit decisions faster and more accurately. Adobe has carried out a research in which makes it clear that over 20% of financial services companies are already using artificial intelligence to streamline their business processes with 41% planning to use it in the nearest future.
One might think that both AI and machine learning sound like the most expensive technological solutions you can get for your lending business because of their complexity. But software vendors are often the first to adjust to the trends and there already are ready-made LAAS (lending as a service) platforms that utilize custom-tailored algorithms and AI for decision automation and almost instant credit scoring.
Blockchain
It’s a real pity, that this tech got so deeply connected just with cryptocurrencies in many people’s heads. But FinTech industries never perceived blockchain so one-sidedly. For them, it really does grant a more secure way to store and operate data. So businesses will keep on developing new ways to use this tech. The truth is that the vast majority of digital lending is still reliant on old-school relational databases. Putting that same data on distributed ledgers of blockchain will often mean much stronger security. At the same time, this can increase operational costs for bigger businesses.
There’s no doubt that in 2019 blockchain will be implemented in many more financial services and products. But it doesn’t mean that everyone should use it because this really isn’t always the right choice. So before you choose blockchain for your company, consult with experts on whether it’s the right way for you. Overall, now that the crazy bitcoin hype is gone, I think we’ll be seeing a lot more seasoned and rational use of blockchain. Which will, in turn, bring way better results.
Alternative lending to keep growing
During the rise of the sharing economy, it’s only logical that alternative, or peer-to-peer, lending will be gaining more traction.
Image source: Morgan Stanley
Even though some bigger banks worldwide try to adjust and reach the underserved demographics, alternative lending firms still tend to do it better. Often, because they adjust to the market quicker and many clients don’t have a credit score that would let them get a loan from a big bank. At the same time, we have investors who are actively looking for attractive yield-generating ways to make their money work. So the trend looks up for P2P lending in the years to come. But the Achilles’ heel of the smaller alternative lending companies continues to be regulatory compliance. Which brings me to my next point.
Regulations
The continuous rise of regtech
Just as the digital lending niche grows, the number of regulations does too with new notices from regulating bodies published every day. Regulations are scary even for the big players, even though they often have whole dedicated departments working on compliance. In 2019 the trend will continue with governments taking a closer look at the FinTech in general and lending in particular. The problem is that small and midsize businesses often don’t have the budgets to have a compliance staff. And all of this would be quite depressing for the people eager to enter the lending market if it wasn’t for the developments in the RegTech sphere.
RegTech, as a separate branch of FinTech, will be of special interest to lenders in 2019 since these solutions will be the ones to both save the businesses operational costs and protect them from the enormous fines that may hit at any moment.
New regulatory sandboxes
At the same time, there’s hope for more regulatory sandboxes to arise in 2019. For example, Norway wants to open up to FinTech innovation by means of a sandbox, about which I’m sure local entrepreneurs can’t be happy enough. As more tier-1 legislations test this approach to innovative tech, more join in. So in 2019, we can keep our fingers crossed and wait for a regulatory sandbox snowball effect freeing FinTech entrepreneurs of the need to think about compliance at least for a little while.
PSD2 directive in full effect
Europe is a huge lending market. And in 2019 the long-anticipated PSD2 directive is supposed to take full effect. For those out of context, PSD2 is a directive that works across the EU and it’s aimed at increasing financial competition for conventional banks through lowering entry barriers into the field. At the same time, it will dictate the usage of reliable identification systems and strengthened data protection. The main point though is that now customers will be able to use services of third-party financial services company through their bank, through an obligatory open API.
Focus on millennials
Even though baby boomers still hold the largest capitals, millennials are quickly becoming a bigger demographic in terms of using the financial services. In addition, they are more likely to switch to a new lender or choose a digital P2P lender as their first one for that matter. So companies in 2019 will keep their focus on younger audiences by means of creating better products, interfaces, and offers.
Striving for financial inclusion
The trend of trying to serve the unbanked or underbanked regions and demographics will continue. While that’s an important mission on its own, it’s also dictated by the fact that customer acquisition cost in developed countries is getting higher and the competition stronger. At the same time, there are billions of people without proper access to financial instruments. So in the years to come it’s reasonable to expect businesses actively working to reach new locations and demographics with lending products.
Digital only lending companies
Even with today’s state of technology, it seems very unnecessary to go to a brick-and-mortar branch to get a loan. The future of lending is without a doubt digital and there is plenty of companies proving it on their example. In 2019 the trend will continue with businesses creating personalized flows and experiences for online borrowers.
Final thoughts
In terms of technology, it’s now easier than ever to get into the lending business. Barriers are low, good lending solutions have all the needed functionality out of the box. And this is a big reason why overall, the competition in the lending field will continue to grow. New businesses join the race all the time and win users over by offering better interfaces, faster processing, more personal support and of course better interest rates. As a result, users are getting more demanding. On a high-level everything that’s going on is great everyone involved: for the industry, for the borrower, and for the lenders.
Are You Ready for Blockchain? Collaboration Could be Key
Photo by Hitesh Choudhary on Unsplash
It’s undeniable that blockchain is a complicated and, at times, daunting technological development. Having said this, the opportunities proposed are as exciting as they are complex. From reshaping business transactions to the secure and accurate exchange of data – blockchain has the potential to improve nearly every financial service industry.
This poses an issue of great internal debate for businesses in markets which could truly benefit from the traceability, security and wider potential presented by blockchain.
As a business, should you invest in tech that could ultimately revolutionise your capabilities at the risk of encountering stumbling blocks? Or, do you sit back and watch while others in your sector pick up the early adopter mantel?
Collaboration could be the answer.
Here, we delve deeper into this dilemma faced by businesses considering incorporating blockchain technology into their wider strategy, and help answer the question; is your business ready for blockchain?
What is the impact of blockchain?
Blockchain is far more than just a channel for cryptocurrency and can offer far reaching business applications. Here are some of the key impacts blockchain could have on your business:
- Automation
- Transparency
- Autonomy
- Security
- Reduced error handling
- Member accountability
How can blockchain help businesses?
When considering whether blockchain is a worthy investment for your business, it’s important to consider what its wider applications could be. This technology can provide clear solutions to challenges in wide-ranging sectors. However, as a business owner, you need to be sure that the investment will benefit your company.
Here are just a few ways blockchain could benefit your business:
- Shared data across several participants or external parties
- Access to edit or update information needed by multiple participants
- Recorded verification and security of participants and users
- Reduction of cost through decentralised record keeping
- Time sensitive information sharing and updates
- Instant, interactive transactions between different participants
- Improved capital optimisation
Should you consider blockchain for your business?
No one is disputing that blockchain is going to become increasingly influential over time. Having said this, it simply isn’t needed by everyone at this stage. If you’re sitting on the fence, there are many points to consider.
Blockchain shouldn’t be considered as an aspiration to achieve for your company. It’s an enabler to aid in the efficiency or cost reduction of your existing processes. Don’t position this technology as a capability which validates your business’ proposition. Instead, it’s a tool to improve your business models and dealings with other companies. If it’s not addressing a current issue or opportunity, it simply isn’t for you at this stage.
Finding your opportunity
Monitoring the way distributed ledger or blockchain technology is used in similar industries is a great place to start when seeking potential opportunities. It’s important to be aware of any competitors who attempt to leverage this tech before you as it may leave you at a serious disadvantage later on.
Consider whether your business could work smarter’ using blockchain and whether you can leverage enough influence to truly benefit from doing so.
What Can EEN Offer Your Business in Terms of Collaboration?
Enterprise Europe Network (EEN) provides a network of specialist support to help companies do business in Europe and beyond. From helping with access to funding to finding trusted partners, EEN can help your business grow internationally.
Here’s how EEN can help:
- Improve the way you manage innovation
- Track down long-term finance from public and private sectors
- Provide a network of world-wide advisers
- Help you find trusted partnerships
- Help you expand into new markets and countries with help from local experts
- Expand and scale-up your business
With hundreds of collaborative partnership opportunities available, EEN allows you to search for SME and academic business partners to develop your products, ideas and services.
Current Opportunities with EEN
Here are some examples of live opportunities available through EEN:
- A UK business is offering a blockchain based employee background checking toolkit to make employee checks more efficient.
- They are looking for organisations that are seeking improvements using automation, candidate experience, candidate privacy and modernising employment checks.
- A London company has developed a next generation private, permissioned blockchain development platform. The platform enables businesses to take advantage of the benefits of the blockchain and apply them to business solutions and applications.
- They are seeking partners to sign commercial agency and license agreements across a wide range of industries to pilot test their built platform.
- A London based start-up is seeking a software developer with relevant technical skills in AI, ML and Blockchain to develop a professional social media and communication cost centre management platform.
- The business wishes to develop service agreements with businesses possessing the technical expertise that will help the company to realise its vision of disrupting technology in the healthcare industry.
- A Portuguese SME specialising in software as a service (SaaS) solutions for fintech and business communication is looking for partners to cooperate under a commercial agency agreement.
- This SME is interested in commercial agency agreements with international partners to pursue their scale-up strategy in European and non-European markets.
How to ensure you’re ready for the implementation of blockchain
Is your business ready to begin blockchain implementation?
There are several factors to consider;
- Commercial gain – is there a value to be taken from this technology?
- Compliance – will this technology comply with the regulations your business is required to meet?
- Execution – do you have the right skills and resources to actually make this work?
- Technical capabilities – can the technology be seamlessly integrated?
- Transparent operations – have you planned a fair and transparent way of governing the wider operational aspects of integrating this technology?
Partnership Opportunities in Blockchain
Enterprise Europe Network (EEN) helps businesses to find global partnership opportunities with SMEs or academia to help manufacture, develop and supply their products, ideas and services. If you’re considering implementing this technology into your business, explore EEN’s blockchain partnership opportunities.
Fintech Origo launches new transfer tracking service
Transfer Tracking, a new service from Fintech Origo, has already saved one firm 60% of its calls to financial services providers, says Anthony Rafferty, MD of Edinburgh-based company
Origo was established 30 years ago this year by a number of pensions and life insurance companies to help the financial services industry to make best use of technology to become more efficient and cost effective and thereby improve outcomes for people using the industry’s services.
Over the years, through the technology we have built, the standards we have introduced, and working collaboratively with industry participants, we have helped financial services to significantly improve its systems, processes and procedures, to the benefit of both the industry and consumers.
One significant achievement was the introduction of our Transfer Service, which was instrumental in reducing the time taken to transfer someone’s pension from over 50 workingdays to c.11 calendardays. Over 120 financial services brands now use the Transfer Service for its operational efficiencies.
One of our most recent builds is the Origo Integration Hub. This technology enables financial services companies working in the financial advice space to connect easily and efficiently with one another through a central hub rather than undertake costly and time-consuming single integrations with each individual firm with which they want to do business.
The Hub enables a number of services to be automated between provider platforms and software and digital tool suppliers. For example, it supports the setting up of new accounts, secure delivery of portfolio valuations from providers to financial advisers and the tracking of asset transfers, such as pensions.
Origo recently worked with Legal and General to adapt the Hub’s Transfer Tracking capability into a bespoke service for the company, called Track My Apps’. This enables real-time, online tracking of pension transfer applications to Legal and General. Origo’s Transfer Service supplies the data to the Integration Hub and the extracted tracking data is integrated straight to the company requesting the data via an API.
60% reduction in follow up calls
Specialist retirement firm Retirement Line says using the Track My Apps’ transfer tracking service has seen its administration team cut the number of calls it has to make following up on customer applications by 60%.
Commenting on the application of Track My Apps by Retirement Line, Mark Ormston, IT and Administration Manager at the company, said that digital responses had literally removed hours of phone calls previously required to provide updates to advisers and their customers on cases, thereby improving both the firm’s own efficiencies as well as streamlining and improving the service to customers.
He said: “Thanks to Transfer Tracking we’ve already reduced the phone calls we make by 60%. If all platforms committed to using this service we would save around 90% of the time we spend making phone calls ”“ imagine what that would mean for our industry, and importantly, the customer.”
Jon Scannell, Distribution Director, Retirement Income at Legal and General also commented. He said: “Through Track My Apps’ Legal & General provides transfer tracking as part of our digital suite to enable [financial] advisers’ access to real-time information on their applications, saving all parties significant time and money. Crucially, Track My Apps’ has enhanced Legal & General’s customer-centric proposition, helping to keep the adviser and their client informed of progress.”
The Integration Hub is the result of considerable consultation and collaboration with the industry. It is increasing in traction in the market with 15 providers, platforms, digital tools and practice management systems now signed-up ”“ including big names in financial services like Legal and General, Standard Life, Prudential and LV= ”“ with many more in the pipeline. Once a company is on the Hub, linking to partnering systems is simple and easy ”“ Legal and General, for example, were able to implement Transfer Tracking in a matter of just six steps.
This is the kind of achievement that has enabled Origo to grow our services and our team to c. 70 people, working primarily from our offices on Edinburgh Park, and in the past six months, to have seen visits from two of Scotland’s Ministers ”“ Ivan McKee, Minister for Trade, Investment and Innovation and Kate Forbes, Minister for Public Finance and Digital Economy ”“ to see what we do and to talk about the future of Fintech in Scotland.