October 14, 2017
The choice was difficult today – talented people are tireless in enriching the pool of knowledge for the community of finance and tech professionals. On the other hand, the Internet age doesn't make it easy to pick out read-worthy pieces.
The first one to catch my attention was a curious piece about the transformation of physical spaces under the influence of the digital world; particularly, how shopping malls became a leisure space rather than what they were intended to be – a shopping space. China is a vivid example of how brick-and-mortar retail will have to change to cut it in the e-commerce-driven world. The lifestyle center evolution – a perfect description of what is happening with retail.
The traditional shopping mall isn't really cutting it anymore in China, said Warner Brown of JLL. Department store and shopping mall landlords all know that they need to start focusing on their tenant mix or the products that are on offer, more on things that people can't buy online: experience.
According to China’s National Bureau of Statistics, 15.5% of all retail sales, amounting to $752 billion ($610 billion tangible goods), were transacted online last year — up 26.2% year-on-year. Over 500 million people reportedly engaged in online shopping in China in 2016, and it’s becoming normal for even fast-moving consumer goods, like toothpaste, to be bought online. By 2020, it is estimated that e-commerce sales in China will surpass those of the USA, UK, Japan, Germany, and France combined. In this fray, traditional shopping centers clearly need to evolve or go extinct.
'Lifestyle centers' really started getting some airtime around 2014 when 'pioneering' centers launched, such as Suzhou Village, which combined art and retail in a thoughtfully crafted Italian setting, Shanghai’s IAPM, which isn't unlike New York’s Guggenheim inside, and Chengdu’s Global Centre bundling shops with a 300 meter-long indoor beach in the world’s biggest building, explained Mark Tanner of China Skinny, a Shanghai-based consumer research firm.
The next few picks of curious knowledge aggregations are FinTech-focused.
I like Knowledge@Wharton, as, I am sure, many do. One of the latest articles was particularly inspiring, voting in favor of collaborative innovation. It’s no secret anymore that competition won’t cut it in the financial services industry. Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off. – FDR. Indeed, a wave of cooperative initiatives traverses over the financial world – between banks/financial institutions and startups, startups and other startups, governments and startups, etc. It became clear that the collaboration will drive the next wave of innovation, and the article on Knowledge@Wharton makes a convincing, example-rich case.
FinTech — or financial technology — is a much-hyped buzzword on Wall Street that brings to mind nimble startups slaying stodgy bank ‘dinosaurs.’ The reality is more complicated. FinTech is growing up: Financial institutions are increasingly viewing these disruptors as partners while startups are learning that they need the scale and regulatory expertise of the incumbents.
We are actively seeking startups for our members to partner with, said Robert Nichols, president of the nearly 6,000-member American Banking Association (ABA). He said the ABA has kicked the tires of some startups to try to match them with banks, and it has invited five disruptors to present at its annual convention, to be held this month in Chicago. The ABA also created a ‘FinTech playbook’ designed for smaller banks. Collaboration is a good thing. The banks have trusted relationships, these [startups] have ideas to enhance the customer experience, said Nichols in a follow-up interview with Knowledge@Wharton.
Big Data Finance is a revolution as well as an evolution that has come into prominence after several decades. Chartists and other technical analysts since at least the 1920s have utilized market data to derive upcoming patterns of prices. Perhaps the first formal breakthrough in Big Data Finance occurred in the 1980s when companies like Bloomberg began packaging and delivering market data in large sets to investment professionals. Big Data Finance 1.0 allowed for extensive data mining, yet with still limited mathematical tools. Computer terminals were expensive, clunky and slow. Still, the inferences were valuable and much sought after.
Big Data Finance 2.0 came with the explosion of the Internet in the late 1990s. Suddenly, it became possible to receive streaming real-time or near-real-time financial data. The innovation enabled the growth of financial technologies such as electronic trading, and market making. Efficient online communication facilitated deal-making, globalization of trading, and much more. The efficiencies of Big Data Finance 2.0 streamlined financial services’ processes and brought down previously prohibitive costs of financial transactions by a factor of 100.
Big Data Finance 3.0 is presently upon us. Big Data Finance 3.0 is really about managing the scale of data and extracting the information within. Today’s big data is about faster, better analytics, an ability to extract that needle from the haystack using the latest data science inferences, and storing, managing and integrating ultra-large sets of streaming and historical data of all kinds: market data, social media data, news, regulations, announcements, and so on.
We have been quite diligent in assessing the value of FinTech for the global ecosystem. So is the City of London with its fresh report on the value of FinTech. The data-rich, 71-page report explores how FinTech helps to address key issues in the financial services industry, outlining 10 recommendations for the Government, the financial services industry and the wider FinTech ecosystem.
FinTech and key drivers of growth FinTechs, businesses which use technology to transform or enable business and operating models in the financial services (FS) sector have grown significantly in recent years.
Image source: Value of FinTech
FinTechs have seen close to $1.5 billion in investments into banking, insurance and asset management each year since 2014.
The growth of FinTechs has been primarily driven by four factors:
Contactless payments have been a very sensitive business since the very beginning – none of the leading providers have been able to live up to optimistic expectations. A March 2017 study found that while the percentage of people enrolled in Apple Pay, Android Pay, and Samsung Pay are at 34%, 14%, and 20% respectively, only 8%, 3%, and 6% respectively of those who are enrolled are actually using the service one time per week or more. The good news is that one of the largest banks in the US is now on board with boosting contactless tech usage.
With the launch of NFC-enabled transactions, the number of card-free transactions is likely to grow by quite a bit. Consumers today are already familiar with how tap-and-pay works thanks to NFC-based point-of-sale systems at checkout. Plus, mobile payments adoption may have also gotten a boost in the wake of the switchover to chip-and-PIN credit cards in the US, where these new chip card transactions often take much longer to process than the traditional swipe ever did. That makes mobile payments even more appealing.
Because mobile payments are already understood by many of Wells Fargo’s over 20 million mobile banking and mobile wallet customers, few will need much education on how to take advantage of the NFC-enabled ATMs.
The bank says it plans to upgrade the remaining 8,000 or so ATMs by next year to support NFC transactions.
Wells Fargo isn’t the only bank prepping its systems for the contactless future. Last year, Bank of America also began offering NFC transactions at its ATMs, and Chase has announced its plans as well.