FinTech challenges and opportunities
FinTech Furio Pietribiasi, Managing Director of Mediolanum Asset Management talks about the opportunities available for the different type of companies, while also discussing the biggest challenges facing the Ecosystem in Ireland
According to Pietribiasi, the growth of the European FinTech industry has been accelerated by the financial crisis.
“Companies figured out that their survival was dependent on becoming smart businesses, reducing cost and increasing their engagement with customers. By being more efficient and effective by leveraging on new technologies, they realised that they had to do it quickly because of the increasing competition,” he says.
He also states that while many people see FinTech as being associated with start-ups and mainly in the payment industry, this is not necessarily the case.
“FinTech is how to apply technology to financial services across the value chain of a business, on the B2B and B2C sides. There are four quadrants in the Ecosystem of the Fintech vertical, characterised on one side, by type of players involved such as medium large established organisations versus the start-ups, and on the other, depending if such companies are regulated or unregulated.
“The resources, skills and finances held by bigger organisations make it easier for them to explore innovation and bring mainstream certain solutions, an example is R3 Blockchain consortium, which as at today comprises of more than 22 of the largest banks in the world. This will enable incredible advancements in the implementation of technology that otherwise would not have been possible if it remained in the hands of start-ups. However, it is still difficult to innovate in the regulated space. Regulators deal in worst-case scenarios, and may not want to be the first to give authorisation to a revolutionary idea.”
In the short term, Pietribiasi sees more strength for projects which do not require regulatory approvals and are well backed up in terms of resources by established organisation operating in financial services or technology in Ireland.
“Large businesses working together to develop FinTech tend to be more successful. This area has the most opportunities, as well as the strongest track record. Ireland is one of the leaders in this quadrant even when compared with a direct competitor location such as Luxembourg.
“In terms of the regulated space, companies face more challenges. However, there are companies like Mastercard and Fidelity operating in this sector in Ireland.”
In Ireland as much as in many other countries in Europe, entrepreneurs and start-up companies encounter many more difficulties in the FinTech industry, particularly when looking to obtain regulatory approval.
“Start-ups are generally not heavily capitalised businesses and often run by young teams. Therefore, succeeding in obtaining regulatory approvals is extremely difficult. They can flourish, however, if they can get support from larger organisations and find an ecosystem that helps them.”
“The big players are often uninterested in engaging with entrepreneurs, but the more this happens the higher growth the industry will see.”
Mediolanum have ongoing engagement with projects and companies fitting in the different quadrants to varying degrees.
“Mediolanum is directly operating in the first quadrant. For example, we are currently working on predictive analytics leveraging on artificial intelligence utilising cognitive computing technology in partnership with IBM. We have also been working with Salesforce to develop our knowledge management and crowdsourced co-creation platform through re-engineering their CRM technology.
“We collaborate with start-ups too. Not necessarily investing, but looking to see how we can leverage on the service they provide. We can become clients if relevant to our business, or we can help with their growth plans through leveraging our network if we think they could add value to the Irish Ecosystem.”
In Pietribiasi’s opinion, cyber security is one of the biggest challenges facing all companies.
“One of the Gartner predictions presented recently at their Barcelona Symposium is that everyone will be hacked – we don’t know how or when, just that it will happen. Cyber security is not simply an element of technology; it’s an element of culture. It’s about people developing their own awareness and ensuring that every organisation has the right culture in order to protect from these risks.”
“Mediolanum has a strong focus on cyber security. We are working with some of our partners to ensure that we are fully prepared. For example, we are developing our stand-alone cloud platform with Option IT which has tier 3 class security, just below military level. We are also talking with start-ups such as HackerOne, who provides a place where companies and the hacker community can work together to address shortfalls within a company’s security best practice before they can be exploited”.
As part of Mediolanum’s effort around maximising the value that can be derived from Data, it has been critical to identify new sources of information in order to fuel their R&D around predictive analytics.
“We began looking at other sources of data and how we could leverage on the web. We realised the need to identify additional and complementary information to the existing traditional data sets that most asset managers use. In this journey we came across Eagle Alpha, another Irish based innovative start-up pioneering such space.”
Mediolanum, is an example of a traditional Financial Services company that has naturally moved into the Fintech space, where Technology has become ingrained in the day to day business and the culture of the organisation.