Managing partner of Singapore venture capital Fund Life.SREDA VC Vladislav SOLODKY in the framework of the annual study “the future of Money” wrote vc.ru column about the peculiarities of the development of the services financial planning in the global market. Despite the growing number of PFM-businesses and start-UPS, PTI industry continues to be a very competitive platform for beginners through partnership, integration, new functional solutions and other methods. The biggest and most important task to Finance the fight against financial illiteracy. Bill gates (Microsoft), mark Zuckerberg (Facebook), Pierre Omidyar (eBay) began to actively support her in 2016 — but on “vintage for the unbanked markets,” we will talk again. Our Foundation is preparing a new edition of the acclaimed in industry study “future of Money”.
In the meantime, discuss, like last year, this problem was solved services the financial products and economic planning, online trading, Big Data and online scoring, chat bots and virtual assistants. Sites for price comparison become popular when the market of any services being formed and is in the process of saturation, as consumers need some kind of “conductor” in the world of services. This is their advantage, as the formation stage of the market, they often aggregate a much larger audience than each of the suppliers of services or products for which they are. But thats their weakness. Once the market reaches the saturation point, and the client eventually finds a suitable provider, the motivation to return to these services drops dramatically.
Therefore, services to compare prices (including banking and insurance services) can resist the fall, but only if they play ahead of the curve. To migrate to a new plane and to provide additional services to your clients. Lie on the surface of newbank, PFM and PFP-services, online-scoring (assessment of the credit history of the client), p2p lending. These kinds of players accumulate large amounts of customers and data about them. It is actively evolving, as are themselves functions of the price comparisons tend to show decline within three years after the phase of active growth.
Recently Google shut down its service Google Compare, which compared the conditions for banking and insurance products in the UK and USA. This clearly shows that even great innovative giants often cant find the right approach to customers and new players always have a chance in the market. Traditional big Bank JP Morgan Chase has decided to strengthen its position in lending due to the play in the previous step. When a customer chooses a car. The Bank is integrated with the online service TrueCar, which allows you to compare and choose the conditions of credit and insurance, but the purchase of a car from different dealers.
It is a positive experience, when a player expands its product range for customers through partnerships with new technological players. Services online SME loan — OnDeck, Kabbage and CAN Capital have formed an Alliance ILPA. He deals with the standardization of processes and regulations for companies wishing to invest in debt. In addition, the Alliance has launched its Smart box, which compares prices and terms on this kind of sites that make it easier for newcomers to online SME lending is opening up this market. These services are developing rapidly in Asia (just the same due to the active saturation and formation of the market).
Hong Kong holding CompareAsiaGroup (present in Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand and Viet Nam) attracted $40 million in a series A (a total of $45 million) from Goldman Sachs and other investors. Indian BankBazaar (works with 50 banks, the audience of 5.5 million visitors per month) raised $60 million in a round from Amazon and other investors to exit in Singapore, Malaysia, the Philippines and the UAE. Many new companies appearing in Malaysia LoanStreet, SavingPlus (Jirnexu) and iMoney. In the UK growing sector for such services for the purchase of real estate and mortgage (like Habito and Trussle). Services, oriented to work in developed markets with traditional centralized credit Bureau — both well-known American leader CreditKarma (50 million users, loans of $3 trillion, the capitalization of 3.5 billion), or newcomers like the British ClearScore (attracted 2 million users per year), more predictable and stable in its development, but at the same time is limited in capacity and scalability.
Services, which are working in emerging markets with users with partial or no credit history, doing more risky work, but the potential growth is practically unlimited. And it is logical. What is more important. Credit capacity or credit history?. The most striking example of American ZestFinance, which attracted shareholders in the Chinese search engine Baidu (80% of search queries in China) and entered the market of China to analyze the credit rating of the residents on the basis of search queries, geo-location and payment transactions.
In addition to China, which is highly dependent on the decisions of state and local current giants BAT (Baidu, Alibaba, Tescent), more interesting for new players looks like the Indian market is also very large, but less busy and more fragmented. International Filipino company Lenddo came to him recently, appeared there, and local players. IndiaLends, CreditVidya and other. In the course of the year Wake up the markets of Southeast Asia (the largest of which is Indonesia). Very interesting projects that point to focus on the needs of individual client groups.
SelfScore analyzes and creates credit ratings for foreign students in the United States (remember Monese mobile Bank in the UK, created for expats). NovaCredit — working with foreign migrants in the US (until now only focuses on the immigrants from India and Mexico). In such a narrow focus is a big advantage. You clearly see what data you can find and use for analysis, when narrow the scope of the request. And, besides, become closer and more understandable to the client.
By the actions of large centralized credit bureaus Experian type (signed a partnership with JD Finance for combating online fraud) and Equifax (does the pilot of p2b-lending platform InvestDen) shows that they realize that the market is changing. There are new types of customers with new requests, and they are no longer able to respond to this market request. As far as these “dinosaurs” are able to move quickly is a more fundamental question, which was the subject of many books and articles like “Dilemma of the innovator”. In 2016, PFM-direction, there was another “exit” — one of the leaders of p2p lending, Prosper us, bought for $30 million service Billguard (now Prosper Daily). A year earlier had been bought by other American players.
Company creating tools to control capital Envestne Yodlee acquired for $590 million (in 2016 they also bought WheelHouse Analytics), insurance giant Northwestern Mutual bought LearnVest for $250 million, and the company is working with student loans Salle Mae for $10.6 million to join the project Social Money (SmartyPig). In 2014, the UK payment giant Misys has bought the Hungarian PFM-developer IND Group. Mint in 2009 after three years of existence was consumed by Intuit for $170 million. With a leader in the field — the U.S. Mint with its 20 million customers to compete can only Brazilian GulaBoslo 2 million and us Billguard with 1.3 million users. The rest of the client base is calculated yet thousands.
Tink — 300 thousand, Trim — 50 thousand, TrueBill — 40 thousand, Nexonia — 1.2 thousand SME customers. A new wave of interest in PFM services has enabled most successfully to attract new rounds of investment. Digit — $22.5 million (total $36 million), GulaBolso — $17 million, MoneyForward — $11 million (total of $48 million) Tink — $10 million, Meniga — $8.8 million Trim — $2.2 million, TrueBill — $1.4 million (at a valuation of $17.5 million), Penny — $1.2 million, Plum — $0.5 million. One of the most active investors in this area — the American Fund Ribbit Capital. It should be noted that the majority of services — purely American (made in USA and are only available in USA).
Exceptions are. European services international expansion demonstrated so far only Swedish Tink (beta-customers in ten European countries) and Iceland Meniga. It is important that PFM rarely shoots as a standalone product, but the direction is complementary to many others: Deposit products (micro-savings) are actively promoted as mandatory conditions of financial literacy and an effective tool of economic planning services such as the Digit, Qapital, Plum, E-susu.
In addition a number of PFM services that targetrooms for students, interesting experience is LearnWest, which historically was created for a female audience, and then became popular among a larger number of users. The rapid growth of technology artificial intelligence (AI) and chat-bots affected the development of such startups as Kasisto, Digit, Qapital, Penny, Trim, Plum, Cleo. Also part of the services (mostly non-American) are developed through integration and partnership with banks. Meniga, the Icelandic company serves a quarter of the population in its market, and in other countries, attracts customers through strategic agreements with banks. Also develop Nexonia in Canada (focused in SME customers), Kasisto and GeeZeo in the United States, TaxTrim in South Africa, MoneyForward and MoneyTree in Japan.
The main problem related to online trading startups is that they all focused on traders. While their is a very small percentage of potential customers. But to invest, in fact, maybe a lot more people. Traders use human greed as the main motivating clients, offering have a high income and pay less commissions. Whereas other areas — music, film, food, sports, travel and others — have traditionally attracted more attention and have to shop more often.
Take media as a mirror of the market — business publications accounted for a very small percentage of the audience. The main challenge for the new generation of online-trading services — how to engage in the process of investment in people who have never done it, that is netradio. Theres not a lot of new players who really know how to attract a new market of customers. For example, eToro takes advantage of the growing distrust of clients to investment advice to institutional investors after the financial crisis (they always earn unlike the client) and attracts newcomers to watch investstrategii and advice of successful private investors from around the world (and they, in turn, monetize their knowledge and actions). Motif Investing is betting that the desire to invest in a particular company arises, not after reading of its financial report or technical analysis, as from surprise or disappointment in life events which interest real-world consumers.
Platform allows you to sell the “motives” of action. Now on the platform 151 of its own “motive”, 9.1 thousand created community and 130 thousand private. The startup continues to develop cooperation with its shareholder — Bank Goldman Sachs, and entered into a new Yahoo Finance. Loyal3 allows brands with a large number of fans to sell shares in a sign of loyalty (“rather likes”). In June 2016 T-Mobile offered its loyal customers with promotions for the activity.
Robinhood has created a service for a new generation of clients — they sit in Snapchat and dont understand abstruse and boring trading services and their opaque pricing. In 2016, the startup had a turnover of $12 billion, and also introduced additional subscription services, which allows database to monetize this free service. A new startup HedgeAble trying to implement a similar model. Trading — traditionally a male occupation, and the project Ellevest focuses on education, involvement and interaction of women among themselves. The second biggest problem with online trading startups — their focus is on speculative stock trading (or Forex, bonds, ETFs or other derivative instruments).
While opportunities “to invest” significantly more: Even more important is to understand that only very few customers investment are the goal for most they. And more important to help clients set goals using PFM and PFP-services (LearnVest). All of the above companies — American. Like many others in this vertical:
Major sites exist in Europe: Japanese Monexo went IPO and launched its venture Fund investments in complementary FINTECH startups. Another Japanese company — MoneyDesign (Theo) — prefers to develop through partnerships with banks. Startups from Singapore — AlgoMerchant robotlove and CallLevel with TraderWave for tracking the investment triggers is too small. Hong Kongs 8 Securities (Chloe) tries to implement the business model of Robinhood in Hong Kong and Tokyo.
The American services are actively seeking other markets. Robinhood (in partnership with Baidu) and eToro (Lufax) came out in China. DriveWealth — Argentina, Chile (Alkanza) and India (c SIC). Over the past year purchased American JemStep (Invesco) and MyVest (TIAA), and the British-German Ayondo acquired Singapore TradeHero.
Send columns, corresponding to the requirements of the editorial Board, [email protected]