The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers consulting services to payment startups.
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Showing posts with label fintech startups. Show all posts
Showing posts with label fintech startups. Show all posts
The Use-Case Canvas for PaymentGenes
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers consulting services to payment startups.
New Year Resolutions for Fintech for 2017
The year 2017 will play an important role in the growth of
Fintech. Some of the resolutions which will drive growth in this area are:
Address security concerns
& strengthen backend infrastructure – both in the transaction as well
as the platform. Businesses involving online transfers of money such as
e-payments, online money transfers and crowdfunding carry the most risk.
Scale to compete with
incumbents – scale will lead to economies which will further drive
competitiveness.
Adhere to new
regulation – with the rise of Fintech, regulators are becoming active in
order to stay ahead of the curve. Fintech startups must find the right balance
between providing a value-added service and adhering to regulation.
Build a profitable
business model – building a profitable business is a necessity as it is not
possible to forceful tactics to drive incumbents out of the market.
Enhance customer
experience by ensuring promises are delivered – to get a foot into this
space, a very high standard of service is required.
Enhanced
usage of the blockchain –
the advantages of a distributed ledger must be utilized as a tool to deliver
enhanced value and build differentiation.
Robo Advisory – An opportunity which is here to stay
If you spoke about investing your money in stocks, bonds
etc., you always had to read up to take calls or had to look for financial
advisers to help you with the same. The first option was risky and time
consuming as you had only limited knowledge and the second one was expensive.
In came the age of Robo-Advisors, i.e. online algorithms
which understand your investment requirements and structure your portfolio
accordingly. Robo-adviros were able to add value to the retail investing
ecosystem in many ways.
Value created for
Users
- Cheaper & Less Prone to Errors: because of
low human involvement in the process. Fees generally lie in between the
0.3-0.5% range, as compared to fees of financial advisors which tend to be over
1% depending on the portfolio size
- User Control & Transparency: users are in
control of their investments and can easily track their portfolio
- User Experience: most platforms offer users a
very ‘human-like’ interactive platform
Value created for the
Platform
- Scalable: scaling is easier with an automated
platform. No (or very little) additional resources would be required when
adding users
- Incremental Improvements: an algorithm can be tried,
tested and improved upon incrementally. Human advice has more subjectivity and
is more difficult to do so
Now that we see that there is value created for users, we can
work out some use cases for robo-advisory. Use cases can be based on end use or
a potential user.
Use Cases based on
End Use:
Event driven: users may want to save up for some future
event such as a child’s wedding, a child’s education etc.
Future purchase driven: users may want to save money to buy something
in the future like a house, assets like jewellery, assets to start a business
and so on.
Personal goals driven: users may want to start saving and investing
their money to grow personal wealth or save for retirement or saving for an
emergency etc.
Use Cases based on
Potential Customers:
Young people in a job: looking to grow personal savings, buying
assets like house and jewellery
Parents: wanting to invest for their children’s education,
marriage
Aging
people: looking to plan their retirement
Game Theory Applied to the Growth of Fintech
Game Theory involves the study and construction of models of
different decision nodes and the outputs resulting from them. The players
involved, which may include individuals, corporates or any other organizations,
have different options to choose from and do so based on the payoffs they
expect from it.
The current state of Fintech startups presents itself as a
very interesting game, the decisions of which will impact the growth and future
of this upcoming space.
My understanding of the current Fintech space and the game
which can be constructed based on it is as follows:
The Players:
The players of the game include a Fintech startup & an Incumbent
(like a Bank).
Possible Actions:
Fintech startup – can either Compete or Cooperate with
incumbents.
Incumbent – can either Compete,
Cooperate or Ignore.
Payoffs:
If the Incumbent & the Startup Compete – the startup has
certain advantages in terms of focus, agility and cost and can gain a good market
share in the particular focus area. However, the incumbent, owing to its size
and customer base, will have an advantage.
If the Incumbent Competes & the Startup Cooperates –
again, the result will be as above as the incumbent holds advantages of scale
and existing customer base.
If the Incumbent Cooperates & the Startup Competes – a
startup wanting to compete with an incumbent looking to cooperate will prove
detrimental for the startup. Startups will find it very difficult to match the
advantages an incumbent has owing to scale and the data it owns. Also an
incumbent can easily find another startup looking to cooperate.
If the Incumbent & Startup Cooperate – this seems like
the best case scenario for both as the synergies between the cost advantages of
a startup and the scale advantages of an incumbent can result in significant
value creation.
If the Incumbent Ignores & the Startup Competes – the startup
will gain advantages as the incumbent is not willing to react to the former’s
progress and is losing out business in that area of its business.
If the Incumbent Ignores & the Startup Cooperates –
since the incumbent has chosen to ignore the startup’s actions, the payoff
remains as above.
Finding the
Equilibrium:
Looking at the Startup’s payoffs, it should
always choose to Cooperate as the payoffs are higher for it in either of the
options selected by the incumbent. The same holds for the Incumbent as well.
Hence, Cooperate-Cooperate is where
the equilibrium lies.
Startup Model – Short Term Finance to SMEs
THE MODEL: A startup
which offers SMEs access to short term financing with no paperwork. Typically
finance is offered to fund gaps in cash flows and for stock purchases.
STARTUP: Iwoca
(British startup)
WHAT I LIKE
Core Idea – Access
to short term financing for SMEs.
Benefits to Users
– Users can get funds by simply linking their online accounts (such as Paypal,
Amazon etc.) or by uploading bank statements. An offer is given within hours of
doing so. Loans are unsecured and have no documentation or origination fee
attached.
Ease of Use –
Loans are approved and available within hours. Money can be transferred to your
bank account 24*7 and interest is charged pro rata based on the time you take
to repay the loan.
CONCERNS
Competition – The
startup is competing with banks and other established financial institutions.
Building trust will be key.
Asset Performance –
Lending to SMEs without collateral is risky. Bad debts can be an issue of
concern.
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