We believe that the global FinTech trend is one of the top topics that Digital Ventures blog readers want to know. Therefore, today, the Digital Ventures’ Corporate Venture Capital team will share the global FinTech trend from the investors’ point of view. The four highlights are Competition for Deposit, Data, ICO to ISO, and Tech Company IPO and Investment.
“Data” causing fierce competition for deposit
Technology has changed the competition for clients’ deposits. Banks are now competing with startups who have become an alternative bank that offer deposit interests along with other services from technology. Also, the need for tech development has triggered aggressive competitions as deposits lead to transactions and transactions lead to data.
Meanwhile, the battle to attract clients is disrupted as tech applications gain popularity. Nevertheless, good strategies are still required along with user experience, user interface design, and marketing. This all leads to intense competition between banks and startups.
Soon, Southeast Asia will house bank challengers who are startups that are alternative banks. These bank challengers are currently trending in the USA and Europe. In the initial phase, the startups will attract clients with alluring services. However, we still need to observe how startups can profit from clients’ interests and data. Surely, it will be different from banks which have well-defined business models.
Data is a much-discussed issue in financial service and advanced technology has expanded the scope of data usage in that it has clearly benefit users.
However, despite the great advancement, regulations in various areas are not well-defined and still require amendments in several aspects. Such uncertainty will surely create difficulties for data users.
Today, corporates and startups in the country remain to have unclear regulations. They are now in the adaptation phase as they are adopting high standards such as the GDPR from the EU.
Another issue is the strategy for data usage. In the beginning stage, corporates and startups need to set clear goals. Aside from wasting costs, the aimless attempt to collect data by attracting users may result in product development that doesn’t coincide with the core businesses.
STO, a new trend that is replacing ICO
ICO (Initial Coin Offering by blockchain) shook the FinTech industry during the past 2 years. In 2019, ICO may not receive the same reception as in the past years due to many reasons. One main reason is the increased knowledge of investors and their ability to better assess ICO. Also, as the government tightens monitoring measures, ICO may now be difficult to access and receive less attention.
Nevertheless, the financial innovation that stems from blockchain hasn’t completely vanished. It is rather reborn as the trade of assets such as stocks via the blockchain. This is called the Security Token Offering or STO. Investors view STO to be quite exciting as it is the trade of securities from company stocks. For investors, the opportunity to get hold of shares is more interesting than the right to a product’s profit. Also, many countries already have regulations for stock trading, thus, ISO may easily become a future trend for funding in FinTech.
IPO and investment: The year of IPO for tech companies
In 2018, more giant tech companies undertook IPO. In 2019, it is forecasted that tech companies and startups will need to submit an IPO with terms and conditions, especially from existing investors who demand their return. For startups investments, there will still be bustling transactions especially for late-stage startups who will remain to receive funding. Moreover, large-scale startups who are not bound to the IPO terms can continue as private companies for a while longer. For series A or B, the assessment will be stricter, and investors will select entrepreneurs who are experienced in the business as it is a profit guarantee.
This is the overview of the global FinTech trend from the investors’ perspective. Digital Ventures has more stories about FinTech, follow us for more updates.
A story by Porlanee Jeamsaksiri, Principal, Corporate Venture Capital, Digital Ventures who was recently selected as one of the Top 100 Global Corporate Venturing’s Rising Stars by the GCV Rising Stars Awards 2019.