A guest post by Romi Mahajan
In the financial world, a few themes have emerged of late that are worthy of note. These themes connect strongly to both the risk and the opportunities available in the world of Finance and Fintech. They should be of interest not only to CFOs and other people whose roles relate directly to Finance but also to anyone looking at the health and well-being of industry in general.
The emerging themes are:
- Decentralized Finance (Defi)
- Data Management
- Risk and Regulation
We say “emerging” not because all of these ideas are new but because the rate of change in these spaces is high-enough to warrant comment.
A sentence or two on each.
- Defi: With the advent of Block chain and Crypto on the one hand and increasingly enabled consumers on the other, Decentralized Finance has emerged not only as a huge market but also as the subject of a culture war between incumbent/infrastructure-like finance stalwarts and a new breed of Cloud-enabled startups.
- Platformization: In the world of technology, cycles are common. We are now in the phase in which connected and interoperable applications built on flexible platforms are the order of the day. Point solutions are being abandoned in favor of platforms and funding patterns are shifting in that direction as well.
- Data Management: With data growing exponentially and AI/ML emerging as mainstays in business, a new truism exists: Those organizations that frame data as an asset and who make the requisite investments in data infrastructure emerge as winners in a competitive marketplace.
- Risk and Regulation: Stories abound of financial mismanagement, large-scale and structurally inherent risk, and massive failure not only because of fraud but also because “asleep at the wheel” is almost a natural state without the infrastructure to deal with data, differential and complex asset classes, and the slew of regulations that govern the world of finance.
Far-sighted organizations will understand these themes not as discrete and disconnected but as part of a holistic view of Finance and its futures. Customers and investors alike need to think of these four factors as they acid-test vendors and any organizations that purport to offer “solutions” for the various needs and opportunities in FinServ in general.
Those whose charge is to make the right technology purchase decisions in Financial Services, need to understand these trends not simply as “flavors of the month” but, instead, as tectonic shifts in how businesses need to run in a modern economy. Similarly, investors need to take into account elements of a firm’s technology and business model that provide for medium and long-term growth, not just “flash in the pan” results.
These two audiences need to converge on the four themes. The Financial Services and Fintech markets are attracting billions of dollars in venture capital and account for hundreds of billions of dollars of tech-spend.
Which companies will become the resonant Finance brands of the future? To answer that ask yourself how they connect with and engage with these four themes.