The digital revolution has been bringing huge disruptions across a range of business sectors for the last decade. As a consequence, several companies have been undergoing complex digitization strategies to better compete in the global markets.
The financial industry is one of the most impacted by these massive changes as the insurgence of new technologies as well as of new business models and an increasing number of new players in the arena is transforming the whole ecosystem.
Therefore, while a part of the City remembers the old glory days for the banking system, by contrast fintech startup innovators continue to foster innovation.
“The transformation in finance to efficient models and tools is well underway in the private market,” Markus Lampinen, CEO of the leading global digital finance platform provider, Crowd Valley Inc. argued announcing a brand new partnership with EBAN, the European Trade Association for Business Angels, Seed Funds and Early Market Stage Players.
Oliver* met up with Alessandro Ravanetti, Co-Founder and CMO of Crowd Valley Inc., to discuss more in detail about fintech, current challenges, future scenarios, and a partnership with the European business angels association.
OLIVER*: Hi Alessandro and thank you for joining us. So, first of all what is this partnership about and what are its main goals?
This collaboration is designed to provide an efficient framework for bringing crowdfunding and online syndication technology to EBAN’s member angel networks, funds and investor groups in Europe, as well as in the Middle East with MBAN and in Africa with ABAN with the aim of decreasing the costs of deal making, origination, deal diligence and capital acquisition.
We’re committed to providing Crowd Valley’s tools and resources as part of the Digital Back Office framework and API, and long-term support for digital strategies with the aim to modernize operations and allow expansion into lucrative online partnerships, potential new asset classes and digital strategies.
O*: What are the main challenges investors are facing in the current financial turmoil?
The costs of deal origination, diligence and deal making is steep. Information asymmetry in various private asset classes give entrenched actors a strong position and increase barriers to entry. However, this opaque nature and lack of transparency weighs on the costs for all parties.
Utilizing technology to modernize financial value chains is our mission at Crowd Valley and being able to provide tools for success for all stakeholders involved levels the playing field, where less capital is lost as transaction costs and more capital is ultimately deployed in the actual deal, leading to a more sustainable operating structure.
O*: Why are syndications becoming increasingly important?
There are different aspects that make syndication more and more important. If we consider alternative finance and in particular equity crowdfunding, syndicates could solve inefficiencies in the context.
For example, it can help with information asymmetry that could emerge when you invest in startups or early stage companies through an online investing platform.
A well informed lead investor that pool the money from a crowd could facilitate the less experienced to take better investment decisions with the additional information he will be able to get about the company that’s raising funds.
Another clear advantage of syndication is given by the diversification of the investments possible with this tool, with the consequent decrease in the risks involved with that for all parties in the deal.
O*: What are the next innovations of the fintech sector?
We are reaching a new stage of development for the fintech sector, where both tech companies and established financial institutions understand that they need one another.
As we have noted by examining the global fintech investments, and with the conversations that we had with partners and clients, there is a rapidly growing number of traditional financial institutions, that are looking to partner and acquire fintech innovators. The same thing for investments in the sector, with major banks like Goldman Sachs and Banco Santander in the first line.
Incumbents have realized that they have to modernize their operations. Generally speaking there is an increased interest from well-established financial institutions and an increased sophistication in the fintech solutions.
Just to give you an example, Convergence , one of our clients, launched this year at the World Economic Forum in Davos, Switzerland, with an impressive number of well-known partners and stakeholders such as Citigroup, the Bill and Melinda Gates Foundation and MasterCard, with the ambitious plan to re-imagine ‘blended finance’ projects in private investments and public equity transactions in the billions.
Going further down looking at the emerging trends in fintech, there are few sub-sectors that emerged with considerable growth.
For example, Insurance Technology (InsurTech), with startups that are trying to wake up the insurance industry, from a long sleep, with the creation of new online distributional and brokerage platforms.
But also Robo Advisory, where online wealth management services are providing increasingly sophisticated solutions for automated portfolio management advice with no use of human financial planners.
Regulation Technology (RegTech) experienced considerable growth as well, with Governments and regulators of a multitude of countries including UK, France and Singapore that have set up Fintech Sandboxes to encourage innovations in finance.
And last but not least Blockchain, a technology that could be very important to innovate not just the financial system but also for a broad range of sectors and businesses. For the public sector, for example, It was recently announced that Dubai will become the first government in the world to execute all its transactions on Blockchain by 2020.