[et_pb_section bb_built="1" admin_label="Section" fullwidth="on" specialty="off"][et_pb_fullwidth_image admin_label="Fullwidth Image" src="https://news.communitech.ca/wp-content/uploads/2017/04/Fintech-During-Regulatory-Uncertainty.png" alt="Cross-Canada Trip Report: Atlantic Canada" title_text="Cross-Canada Trip Report: Atlantic Canada" show_in_lightbox="off" url_new_window="off" use_overlay="off" animation="left" use_border_color="off" border_color="#ffffff" border_style="solid" /][/et_pb_section][et_pb_section bb_built="1" admin_label="section"][et_pb_row admin_label="row"][et_pb_column type="4_4"][et_pb_text admin_label="Text" background_layout="light" text_orientation="left" use_border_color="off" border_color="#ffffff" border_style="solid"]
The past year has been riddled with regulatory uncertainty due to stunning upsets in international politics with both the 2016 U.S. election and the Brexit causing volatility in global markets. As a result, the once explosive growth of the financial industry led to an environment which required greater reliance on partnerships with big banks for stability.
The latter half of 2016 was marked with new strategies to reduce expenditures and a refocus of efforts which revealed a gap where technology startups could thrive and really begin disrupting sectors such as: payment services, currency and markets, insurance, investment and stock, banking, and financing. By definition, this cohort of tech startups has been traditionally referred to by the term Fintech.
The global investment in Fintech has risen sharply from $930 million back in 2008 to $19 billion in 2015. Fintech funding continued to soar throughout 2016 primarily due to large funding rounds by Chinese Fintechs, along with newly formed Fintech areas of specialization such as Insurtech. The skyrocketing investment in Fintech can be attributed to many things. For example, robo-advisors are promptly becoming the principal disrupter in the investment and stock space as they are forecasted to manage over $8 trillion in global assets by 2020.
From a commercial standpoint, big banks are partnering and adopting open data for three primary reasons. First, by opening data to third parties, big banks can demonstrate that their security measures are adequate and that being afraid of transparency is a thing of the past which will reassure clients from an ethics and security standpoint. Second, large institutions can attract new customers into the ecosystem who are enticed by the offerings of Fintech. This also allows for many new opportunities to upsell and cross-sell this new user base with more traditional products such as mortgages and loans. Lastly, open data allows the large financial institutions to leverage Fintech technology and innovation to expand existing service offerings without incurring the large costs that are generally associated with internal innovation.
Currently, trends can be seen showing more open data liquidity between big banks and Fintechs. However, in a world where there is an arms race in the Fintech market, and big banks are happy to partner with the ‘next best thing,’ will there be enough room for everyone in the marketplace?
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John Chiappetta leads Projects & Initiatives at Canada’s Open Data Exchange (ODX). He works with companies and municipalities of all sizes to enhance their use of data and innovation to improve services, inform local decision-making and drive engagement. John believes that the most critical business questions are not answered with what data you could or should access, but by first working out what your business is looking to achieve.
John holds a Masters degree in Political Science and has completed undergraduate work in Political Science and Business.
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