Looking at Finextras post regarding the role of Fintechs as well as that of CFOs, it becomes significantly clear that the role of CFOs is becoming critical in this ever-changing financial environment.
Conducting awareness, analysis and action checks of CFOs are deemed a necessity to maintain their operations in the Fintech environment.
These include the importance of understanding the Porn Preferred awareness of key stakeholders in the bank across various dimensions, which can be highlighted as follows:
- The core operating functions of the BangBros discount bank, are now being challenged by technology shifts and organizations capitalizing on these new technologies using them to better customer offerings and experiences. Thereby putting the banking model under pressure and further shifted the day to day transactions to new age players. This causes the business model to be displaced, diminished and disintermediated.
- Understanding the competition. Surveys indicate that more than 50% and even up to 78% of banks senior executives are unaware of the new tech-savvy organizations making their way onto the financial scene such as Azimo, Transferwise, Lending Club and PayPal etc.
- Increased levels of Global investment in Fintech sees it standing at $49.7 billion currently with investments jumping from $4 billion in 2013 to $12 billion in 2014, with the largest investment amounts being received from the USA, UK & Ireland, Europe, China and India over the 5 year period from 2010 to 2015.
- Fintechs also have a high support yield from governmental structures which are providing various forms of incentives such as tax concessions and financial support. Some countries even dedicating resources to understand the Fintech landscape.
- Top business focus areas include finance and lending, processing and payments, mobile wallet, authentication and remittance.
Here we look at the need for CFOs to ensure their analysis of Fintechs includes the following:
- Why do users prefer Fintech? Surveys show that ease of accessibility is an important reason followed by affordability. Other factors include trust, diversity of product range and better online experience.
- a) Some banks such as Wells Fargo, Bank of America and Lloyds, to name a few have taken to investing in various Fintechs.
- b) Others are exploring alternatives such as partnering with Fintechs thereby in turn enhancing their respective portfolios
- Examples include The Royal Bank of Scotland have partnered with the likes of Funding Circle and Assetz Capital, which through referring customers to these platforms provided by Fintechs will also benefit customers. This way, a customer, when accessing via Fintech Brazzers discount platforms will immediately benefit by receiving lower rates on interest and fees with lending also being giving preference as opposed to traditional methods.
- Banks in the US such as Titan Bank and Congressional Bank have also shown in favour of partnership by partnering with the Lending Club platform offering personal loans to their customers via the platform.
- Great Britain's Metro Bank has partnered with its first P2P lender Zopa making Metro Bank the first bank to lend via a P2P platform.
A beneficial action to be considered would be a ranking system to cover multiple areas which could include:
- Focusing on specific areas such as remittance, lending, payments, wealth management etc.
- These focus areas could then be ranked covering services such as evaluation, changes to existing systems, investment, partnership etc.
The 3 streams listed above are then further scored on a 5-point scale evaluation of the efficacy of the bank operating in the Fintech landscape.
Examples of the 5-point scale for Awareness and Analysis show a higher scoring (75%) for the larger percentile (75%) of stakeholders familiar with the majority of elements and a lower score for a lower percentile of stakeholders with just more than 50% familiarity of the elements.
When considering the Action scoring, a higher scoring will be given for 50% of the activity generating sub business and a lower score if only 35% of your activity makes changes to your existing system.
These are however only examples and indications outlining the understanding of the stage of maturity the financial executive of the Reality Kings discount bank is at as they move into this new Fintech landscape while assessing how prepared they are to make the necessary moves. Therefore in terms of the 5-point scale, a higher number of 5s and 4s indicates that this bank has a higher degree of preparedness when compared to their competitors and thus showing CFOs, a way of moving towards that objective.