Who’s eating your lunch: The new competition, Tradestreaming Money Conference, November 14th, 2016
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This document discusses the competition that financial institutions face from large technology companies ("Tech Titans") like Google, Facebook, Amazon, and Apple. It notes that these companies have massive user bases in the billions, mobile-first mindsets, and access to vast user data that give them advantages over both startups and traditional financial firms. The document also suggests that Tech Titans are increasingly eyeing the financial services industry and that their entrance could significantly disrupt existing business models through forces like transparency, reduced friction, and deflationary pressures. It advises financial institutions to closely monitor strategic moves from Tech Titans and consider collaborating with FinTech startups to counter the looming threat.
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Who’s eating your lunch: The new competition, Tradestreaming Money Conference, November 14th, 2016
- 1. 11/15/16 Confidential. Do not distribute. Who’s Eating Your Lunch? The New Competition 11/15/16
- 2. 2 2 The Usual Question: Startups vs Incumbents? • Speed • Focus • Modern Tech • Culture of Risk Taking • Experience • Process • Hard & so? assets • Culture of Risk Management vs.
- 3. 3 3 Better Question: Tech Titans vs. Incumbents vs. Google. Facebook. Alibaba. Amazon. Apple. Tencent. • Gigascale – franchise of 1B+ consumers as table stakes • Mobile – smartphone is core their DNA & strategy • Data – richer, more universal data sets + cuMng edge analyNcs • Mindset – “What’s Possible?” vs “We haven’t done it that way before.”
- 4. 4 4 Money2020 attendance had Tech Titans in force 0 10 20 30 40 50 60 B of A Google Synchrony PayPal JPM Amazon Equifax Facebook Number of a+endees in 2016 @ Money2020
- 5. 5 5 Tech Titans are Eyeing Financial Services…why?
- 6. 6 6 Hallmarks of Tech-driven Transformation Transparency Less FricNon DeflaNonary +
- 7. 7 7 If I’m right … so what? 1 2 3 FinTech startups represent a petri dish of experimentaLon. Monitor for winning ideas. Tech Titans represent much greater threat than startups. Monitor their strategic moves closely. ExisLng revenue pools will decline, while costs also fall with tech. “CreaLve DestrucLon” of Oppty. Incumbents can, and should, collaborate with the FinTech startups to counter the looming threat posed by Tech Titans.
Editor's Notes
- If you’re a financial services company…maybe one with billions in revenue, billions in market cap, lots to gain but lots to lose…who should you be worrying about? BaU – it’s the other guys who look just like you. If you’re BoA you’re worrying about Wells. If you’re Citi you’re worrying about COF. If you’re SunTrust you’re worrying about 5th 3rd. If you’re Visa you’re worried about Amex. If you’re Western Union you’re worried about Moneygram
- The typical dialogue at this kind of event is about whether the Startups are going to eat the lunch of the Incumbents. Legit worries. Example: Western Union worry about Xoom, Remitly, Flywire Example: Discover worry about LendingClub & Prosper Example: Experian worry about Credit Karma Classic battle of startups & incumbents. Advantages, disadvantages. CULTURE.
- Titans are much more formidable. True, there are only a handful of them rather than dozens and dozens, maybe hundreds, of FinTechs. But when they point their guns at the sector, watch out! Talk through the advantages THEY have (each bullet)
- One way I like to monitor level of interest by the Titans – attendance at conferences vs. the incumbents This chart is a bit unfair…hand picked some comparisons…but no matter how you slice it, the titans were there in force (COF wins, by the way, around 90 attendees) - You might ask, Why?
- WHY? Big profit pool. And the titans are so big, they need to go after big markets to move the needle. In FS we move bits, not atoms. These guys view moving bits as a core competency. Strategic for their core business / creates stickiness. Eg Apple Pay. Eg Facebook send $. Eg financing commerce. They sense a window – smartphone + modern tech vs. legacy.
- Titans will apply tech take out friction via technology. External & Internal. Titans will apply tech create transparency via technology. External & Internal. - Defailtion in your space. Lower revenue, lower cost in your existing biz. What to do? PARTNER WITH THE STARTUPS. IN GRAND BATTLE BETWEEN INCUMBENTS AND THE TITANS, BALANCE WILL TIP TO THOSE WHO CAN LEVERAGE, MAYBE ASSIMILATE, THE FINTECH STARTUPS
- (just walk through the bullets)