State of play in FinTech

 

Sameer Chishty is Hippocorn's Co-Chairman, Head of Asia and Lead FinTech advisor. He has over 20 years of experience in top-tier consulting, financial services executive roles, and FinTech advisory & investing.

Sameer Chishty recently spent 4 days at the world's largest payments and financial services innovation event Money 20/20 and 1 day at IBM World of Watson in Las Vegas, attending over 14 cocktail parties and over 50 meetings over the course of the week. Based on his participation and discussions Sameer came up with the following insights on the plane back home:
 

  1. This is the greatest time in the history of mankind to launch a startup. Capital, talent, toolkits etc are abundant and accessible.
     

  2. FinTech is ripe w opportunity! Ultimately successful FinTechs will solve customer problems. And financial services customers have way too many problems. Still! Despite 50 years and hundreds of billions of dollars of tech spend and people’s salaries.
     

  3. Most FinTechs are nonsense and won't survive because they ignore realities of customer inertia and financial regulators, and because Founders have way too much optimism in the power of technology delivering marginal benefits. 
     

  4. These FinTechs deserve to die, but are alive because costs of starting a company are at 5,000 year lows and because there is a tidal wave of stupid money.
     

  5. At the same time, there are many many many impressive FinTech innovations. To be successful at creating & monetizing value, these companies need to be refocused for value capture. Refocused in terms of customer proposition, growth strategy, customer experience, business development capability, product focus, etc.
     

  6. Successful FinTechs who offer “BETTER” elements of financial services will partner with incumbent financial institutions to tap their regulatory expertise or capability, and installed customer base. (Incumbents: there is hope; partner wisely!)
     

  7. A small handful of FinTechs who are providing “DIFFERENT” will be successful by confronting the incumbents, receiving their own licenses, and creating new ecosystems.
     

  8. Most cities / countries that want to be FinTech hubs have severe challenges about capital and regulations; but the biggest problems are about talent pool and pipeline.
     

  9. There is so much damned money out there for Founders. It's unbelievable. 
     

  10. However very few VCs actually have original thoughts and clear views and strategic direction. The vast majority just mimic ("fast follow") the leaders, and pray they can exit before the music stops. So you've got this fear & greed dyspepsia going on. Some VCs get paralysed.
     

  11. Despite as a society our veneration for the innovators (people who go "from 0 to 1”, using Thiel’s framework), a LOT of money is to be made "going from 1 to n" in terms of taking good ideas to new product areas and geographic markets ("advanced copycats"). My issue is when investor copycats freeze up with indecision or when founder copycats don't sufficiently modify/customize for local success.
     

  12. Vast majority of banks are still stuck with customer experiences from the 80s or 90s. And are massively vulnerable. But theirs will be a slow painful public loud cringeworthy death.
     

  13. Incumbents’ huge advantage is their deep customer insight, trusted relationships, vast data troves, regulatory understanding, and installed operating platforms – it’s getting all these to work well together in a focused manner that is the major challenge. Senior bank executives who can solve deserve fat paychecks. The rest, well, you know.
     

  14. I'm stunned by the breadth and depth and low cost of white label turnkey solutions to almost everything in banking. This is helpful in getting attackers to market a lot faster and cheaper than banks realize, and some of these attackers will scale super fast.

  15. On a more micro note, many of my predictions from 18-24 months ago are coming true: Insurance, B2B payments, AI are sky rocketing. Robo WM has become a commodity. Lending has hit a wall and is restructuring. Blockchain may have passed the hype cycle and offers pockets of real value now. Less-shopped geographic markets around the world are now spinning out awesome companies and deserve deeper look by investors.
     

  16. China is amazingly large (as you know) and amazingly creative (you may not know) and amazingly competitive (brutally so).
     

  17. Despite China’s brutal competition, most US FinTech VCs are still trying to find a way into China; few will succeed. Winners in China will be smart and connected Chinese investors. (Also see my note on China FinTech)
     

  18. Chinese FinTech VCs are flooding into the US. Most are clueless. Few will succeed. But hunt for the ones that hold the keys to the Middle Kingdom; they can open up China for their portfolio companies.

  19. We desperately need more women in FinTech. Get the word out: Women may actually be better at solving problems than Men. And there are large dedicated pools of capital available just to Women Founders.
     

  20. The most under-appreciated stakeholders are regulators, with whom it’s too easy to complain. Reality is Financial Services regulators are smart, savvy, and can be a Founder’s and Investor’s best guide.

 

HIPPOCORN HELPS START-UPS AND ESTABLISHED FIRMS MOVE IN THE RIGHT DIRECTION, BY CONNECTING THEM WITH INVESTORS AND SPECIALIST ADVISORS FROM AROUND THE WORLD.

The team has facilitated more than 430 company changing transactions between them, ranging from US$50K to US$3 billion. In addition, each of the core team members has hands-on experience launching or working on a start-up previously.