FinTech, from 'Nice to Know' to 'Need to Know

Results of the survey held among corporates about their view towards FinTech

FinTech: from ‘Nice to Know’ to ‘Need to Know’

Robi Dattatreya, Douwe Lycklama en Pieter Nijs

16 September 2015

2 FinTech: from ‘Nice to Know’ to ‘Need to Know’ – 2015 ©

In 1998 ABN AMRO launched its innovative online FX and MM dealing platform…

…10 years later, online FX and MM dealing has become mainstream


Payer

Bank Bank

Payee

Traditionally, banks are the place to go for initiating and receiving payments

SWIFT, correspondent banking, etc.


PSD2: The EC wants more innovation and competition in the banking sector

Payer

SCT, SDD

Cards, Cheques

ACH

Visanet, Banknet

Real Time Gross Settlement

Bank Bank

Payee



FinTech: Innovation ‘on top of’ banking

Payer

SCT, SDD

Cards, Cheques

ACH

Visanet, Banknet

Real Time Gross Settlement

Bank Bank

Payee



Financial Institution (FI)-services

FinTech: Positioning in four different ways

New services (non-FI)

4: ‘Diversification’2: ‘Direct competition’

Traditional FI’s

1: ‘Disintermediation’

3: ‘Supplier’

Source: Innopay analysis



FinTech: Positioning in four different ways



Traditional FI’s


Most corporates follow the FinTech market

Not at all

We follow the market passively

We follow the market actively

We talk to various parties

We work with a FinTech-party


Major concern is supervision and continuity

We want to maintain our relation of trust with our bank

We doubt the adequacy of supervision

We are uncertain about the continuity of FinTech-parties

We are uncertain about consequences to internal processes

We are uncertain about the added value to our corporate


Survey concern 1: regulatory supervisionMany FinTech-companies are supervised


Survey concern 2: continuity | FinTech has moved towards Early Majority Acceptance

Innovators 2.5%

Early Adopters13,5%

Early Majority34%

Late Majority34%

Laggards16%

Your

Co

mpa

ny?



Four Examples of FinTech service offerings


1: ‘Disintermediatie’


4: ‘Diversification’

Traditional FI’s


Pro Quidity competes with banks to optimise the working capital in your supply chain

From Amsterdam

<10 employees

Established 2014

Pro Quidity offers ‘reverse factoring’ to SMEs: it finances your outgoing payments to SME suppliers, on the basis of your creditworthiness

Positioning 2: ‘Direct competition’


Your supplier Your corporate

Reverse factoring is financing your payments, on the basis of your creditworthiness

Factor

1. Delivery

2. Approval of invoice

3. Payment of invoice* 4. Payment

to facto

r

*On the basis of your creditworthiness, not that of your SME supplier


Reverse factoring ensures a healthy supply chain – and direct benefits to you

• SME suppliers often lack the creditworthiness for traditional factoring

• Pro Quidity offers such suppliers a helping hand

• Reverse factoring: financing your outgoing payments

• Ensure healthy suppliers with your own creditworthiness

• Ensure longer payment terms (to the factor)

• And ensure early payment discounts – as the factor already pays!


Cashfac offers Virtual Bank Account-technology to corporates and banks

From London

±80 employees

Established 1992

Cashfac offers Virtual Bank Account-technology that enables clients to centralise their cash- and transaction management

Positioning 1: ‘Disintermediation’


Virtual Bank Accounts enables you to allocate funds without separating them physically

Entity A Entity B Entity C

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

EUR

EUR

= Current account = Mirror Account = Virtual Account

Legend

‘Real’ world

Virtual world


• Centralise multi-entity transactions – and POBO/COBO subsidiaries• Centralise multi-entity transactions – and POBO/COBO subsidiaries

Virtual Bank Accounts enable you to centralise at different levels

• Self-service your bank accounts

• Minimalise the number of Current Accounts

• Connect multi-bank accounts

• Reconciliate ‘straight-through’

• Centralise multi-entity cash


You could use Virtual Bank Accounts to POBO/COBO subsidiaries

Entity A Entity B Entity C

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

Payables

Suppliers

Salaries

Taxes

Receivables

Custom

er 1

Custom

er 2

Custom

er 3

EUR

EUR

‘Real’ world

Virtual world

Payment On Behalf Of Entity B

= Current account = Mirror Account = Virtual Account

Legend


Earthport offers banks a hub for faster cross-border payments

From London

±150 employees

Established 1997

Earthport offers a cross-border payments hub that enables clients of banks to pay to other countries both faster and cheaper

Positioning 3: ‘Supplier’


Banks can take a shortcut on the existing infrastructure

BankVS

BankNL



While cross-border payments are rerouted via banks today, with costs at every bank…

PayerVS

PayeeNL

$ $


Earthport functions as a central hub that can connect a bank to other banks – directly

PayerVS

PayeeNL

$

$

$


‘Distributed ledger’-technology such as Ripple can do the same… and more in the future

BankVS

BankNL



FinTech = Need to Know!!

Get in the driver’s seat!

Robi Dattatreya, Total Solutions, www.ts.euDouwe Lycklama en Pieter Nijs, Innopay, www.innopay.com16 September 2015

Technology

FinTech, from 'Nice to Know' to 'Need to Know