Fintechs Aren’t Moving Fast

AREN’T MOVING FAST ENOUGH, AND ITS FAILING THE END USER Change in financial services is constant, and out against other players in hope to launch emerging fintech players have now reached to market quickly and stand out against the a level of maturity where they are challeng- crowd. But whilst these requirements are ing or revamping almost all pre-existing all necessary, it can take fintechs up to a finance systems. Whether it’s know your year, or sometimes longer, to jump through customer (KYC), regulation compliance, or these hurdles and finally get to market. payments, fintechs are driving significant shifts in thinking throughout the industry. “ These processes have also become

However, with every success story there’s especially those that do it themselves, a whole host of fintech failures, and often time is money, and building and dethose fintechs that fail to progress beyond veloping a platform can become an a concept, are those that spend too much extremely expensive venture. This is time and money on their proposition. Many why many bring in investors to further inevitably head down the ‘fintech spiral of their operations and drive scale. But by death’ route - whereby the complexity of increasing the time it takes to launch, the market and a lack of access to funds, fintechs are draining their initial funds hinders their development cycle before it even begins. But this does not, and should before they have even started, and investors quickly move to new invest ” not have to be the case. ment targets in the space.

Why do so many fintechs fail?

Many fintechs fail to launch due to the complexity of the sector. In amongst the world of regulation, licensing and compliance, fintechs often find themselves battling it

much more expensive. For fintechs,

What’s more, the time spent navigating through the complexity of the ecosystem and wasting valuable time on back-end issues, means fintech are losing focus on what’s truly important - how to grow their customer base and drive revenue. This is something that’s especially important right now. With Covid-19 demonstrating the changing needs of customers, fintechs need to keep up and launch far more quickly.

The build or buy conundrum

Not only is the slow, but necessary, world of regulation one of the biggest factors for a fintech failing, but so is building and connecting the different elements of the ecosystem into a platform.

Since the start of the fintech revolution, many incumbents have attempted to match a fintech’s offering, developing their own innovative solutions by building it themselves - rather than seeking help from third party providers.

Take the Royal Bank of Scotland (RBS) for example. It recently dropped its standalone digital bank Bo which tried to match the speed and simplicity of top challengers Monzo and Revolut, but couldn’t keep up with the pace and therefore failed.

This is an example of why doing it yourself and building your own ecosystem is no longer working - even big players like RBS do not have the infrastructure to do so. Many good fintech ideas are therefore being lost in the abundance of new fintech taking the financial services by storm, but for fintechs to move quickly and stand out against the crowd, there’s another solution gaining ground.

Let’s speed up innovation

To speed up innovation and meet the demands of customers, fintechs need

to utilise the tools at their disposal, and collaborate with other fintech players to establish valuable platforms that can thrive in the challenging market.

Specialist fintech companies provide a ‘onestop-shop’ for fintechs looking to launch, dealing with the important, but resource heavy tasks - including regulation, licensing and compliance, but also the ever-changing ecosystem integrations which can be costly. This in turn allows fintechs to focus on improving their overall business strategy, so that they can launch quicker and act with greater agility.

The needs of customers have changed as a result of Covid-19 - speed, simplicity and security when handling finances is now vital, and with fintechs taking far too long to develop and launch new products that meet these demands, they are ultimately failing the end user.

If emerging fintechs want to continue to drive further innovation across the industry, then they need to move quickly and launch to market at a much faster pace

Stefan Pajkovic, CEO TradeCore

Source: 1 https://techcrunch.com/2020/08/11/building-a-fintechgiant-is-very-expensive/ 2 https://www.cnbc.com/2020/05/01/rbs-drops-bo-itsattempt-to-rival-monzo-and-revolut-why-it-failed.html

Cloud adoption –is it even a choice anymore?

In early 2020, we had plans, we had goals, we had a roadmap. But since then most things have changed. When O’Reilly fielded the annual Cloud Adoption report in early 2020, there was anticipation about the results, but even they must be looked at through a new lens. Some changes will fundamentally impact the trajectory of cloud adoption, so we must take these into consideration.

Originally, this survey was commissioned to understand changes to cloud usage throughout the enterprise from year to year. This would enable us to predict future trends, understand the motivations within sectors and acquire a better understanding of barriers and challenges on the journey to cloud.

Without devaluing the impact that COVID-19 will have on the long-term adoption of cloud, the survey still serves as a good indicator of where enterprises stood, habits, preferences and general attitudes towards cloud. It is a starting point.

Join the cloud crowd

Cloud is happening and quickly – not necessarily something that surprises anyone, but the rate of adoption is staggering. Across the 1,283 survey respondents, 88% shared that their organisation uses cloud services. What is even more telling is that over 90% of respondents also stated that their organisation expects to increase its cloud-based infrastructure.

Although these numbers indicate wide adoption of the cloud, what is always intriguing is how much of its infrastructure an organisation plans to put into the cloud. When asked about this specifically, nearly a quarter of respondents – the second largest cluster – indicated to the cloud. On the flip side, 34% plan to move just a quarter of their applications. Looking forward, three years to be specific, this jumps to 40% of respondents predicting they will have migrated all of their applications to the cloud.

When we are talking cloud, the definition includes software-asa-service (SaaS), platform-as-as-service (PaaS) and infrastructure-asa-service (IaaS). These terms cover everything, from cloud-based email and office productivity tools through to born in the cloud applications. Now cloud diehards might not consider all of these tools equal with analytics and microservice applications, they certainly fall within the broader understanding of the term. This broad definition also helps to account for the possible lack of visibility around cloud usage, especially in large, possibly siloed organisations.

On the surface, these results may not change any of the current thinking. Actually, many of the results simply reaffirm the current views on enterprise cloud adoption and usage. Organisations are increasing their use of the cloud. Organisations have plans to grow cloud services. Cloud on the surface is no longer new or innovative, it is a necessity. It enables expansion of storage, upgrading of systems and tightening of budgets while still embracing change and digitally transforming.

Putting it into practice

Digging a little deeper, it is important to understand the relation between cloud saturation and company size. To do this we asked adopters what percentage of their applications are hosted in the cloud. 21% indicated that they host all applications in the cloud, however, the majority (39%) indicated that a quarter or less of their applications

that they plan to move 100% of applications to the cloud. On the flip side, 34% plan to move just a quarter of their applications. Looking forward, three years to be specific, this jumps to 40% of respondents predicting they will have migrated all of their applications to the cloud. When we are talking cloud, the definition includes software-asa-service (SaaS), platform-as-as-service (PaaS) and infrastructure-asa-service (IaaS). These terms cover everything, from cloud-based email and office productivity tools through to born in the cloud applications. Now cloud diehards might not consider all of these tools equal with analytics and microservice applications, they certainly fall within the broader understanding of the term. This broad definition also helps to account for the possible lack of visibility around cloud On the surface, these results may not change any of the current thinking. Actually, many of the results simply reaffirm the current views on enterprise cloud adoption and usage. Organisations are increasing their use of the cloud. Organisations have plans to grow cloud services. Cloud on the surface is no longer new or innovative, it is a necessity. It enables expansion of storage, upgrading of systems and tightening of budgets while still embracing change and digitally transforming. Digging a little deeper, it is important to understand the relation between cloud saturation and company size. To do this we asked adopters what percentage of their applications are hosted in the cloud. 21% indicated that they host all applications in the cloud, however, the majority (39%) indicated that a quarter or less of their applications are in the cloud. This provides even more insight when viewed in the context of company size. At companies with 100 employees, 37% cited having all applications in the cloud followed by 22% noting 75% of applications reside in the cloud. This is logical in the context of the cost-effectiveness and scalability of the cloud versus on-premises solutions. Smaller companies may also encounter fewer barriers to adoption and embedding new models, with many now being ‘born in the cloud’. Despite this trend, in companies of 10,000+ staff, a surprising 17% host 100% of their applications in a cloud context. The traits that make cloud appealing for small companies – cost, flexibility, scalability, accessibility – also appeal to organisations with globally dispersed employees. Of those who have not jumped on the cloud bandwagon, the most commonly cited reasoning was culture, skills shortage and an ‘organisational preference to keep data on-site’. Interestingly, many of the barriers here are also seen across other technology adoption cycles, specifically AI. When asked specifically what combination of solutions organisations are using, public and hybrid cloud were two of the most popular, with 61% and 39%, respectively. Traditional, on-premises infrastructure follows with 49%. This reinforces that even though cloud adoption is permeating many corners of organisations, it is not a catch-all solution. The results overall may not definitively say cloud is always the way to go, but they do point to a state of flux. Many organisations are using a stop gap of multiple solutions. In the years to come, the current status of adoption and usage will provide an important gauge of progress.

The sky’s the limit

When the survey was conceived, we did not imagine that it would become an artefact of our pre-pandemic reality.

As with many things, there is an element of evaluation around what we would have changed if we knew what 2020 held. Naturally the survey would look more closely at resilience, remote working and cost reduction, topics that

have come to the forefront for many organisations. No doubt, the questions we think we would like to ask today will continue to evolve throughout the year as the landscape continues to change and as our understanding of the events and impact of this period unravel.

In times of change, it’s worth knowing where you started.

Mary Treseler, VP of Content Strategy at O’Reilly

Source: 1 https://www.oreilly.com/radar/cloud-adoption-in-2020/ 2 https://www.oreilly.com/radar/ai-adoption-in-theenterprise-2020/