Since 2008, an increasing number of technology ventures have been revolutionising the financial industry.

This is what I called in 2013 the “FinTech Revolution”.

In this article, I focus on the reasons for this revolution from a strategy and innovation perspective.

I also listed some of the best FinTech ideas. These are great examples of disruptive ideas that have now become significant providers of financial services.

A Change of Paradigm

The internet has allowed an innovative jump to occur in many industries. Customers have now an easy, very affordable access to books (e.g. Amazon), furniture (Made.com), TV (Netflix), education (Coursera.org), media (YouTube)…

Imagine industrial robots in an automotive assembly line. Everything is smooth, fast, and efficient…

Think about Tesla’s Factory, for example.

What you now have in mind does not happen in most small and medium manufacturing enterprises (SMEs).

SMEs don’t compete with the same weapons.

Larger firms benefit from economies of scale and can afford different weapons. I like to describe the situation as bow and arrow vs. rifles and full-metal jacket bullets.

Robotic arms are paradoxically too sophisticated compared to what most SMEs need. As greater performance means higher price, SMEs cannot afford these robots.

You’re already indifferent to this, but let’s think about it for a few secs:

The internet has just changed how we run businesses.

Imagine the excitement for someone who wanted to start a business 20 years, if they had access to the same technology.

 

 

Of course, they would jump for joy!

You can do so much now:

You can spread ideas and stories and virtually reach anyone in the world. You have access to an amount of knowledge nobody has ever dreamt of before. You can design and build things with people you’ve never met. You can do all of these at scale, without any need to be hired by a firm.

Making the right career choice or business decision is difficult.

It might even get quite overwhelming.

Right?

You consider your alternatives, reconsider them, doubt a lot…

And most of the time, you end up making a short-term decision rather than having clarity on where you’re going.

There’s a way to change that:

Make a clear distinction between strategy and tactics.

It appears that what we often need is a better strategy, but what we’re looking for are tactics. We want a shortcut because we’re not keen on making difficult decisions.

Business ecosystem is an important concept in marketing strategy.

Why?

Being part of an ecosystem boosts both innovation and growth.

(1) It opens many doors for innovation by preventing from having to reinvent the wheel.
(2) It’s a springboard for reaching new audiences.

Building a Business Ecosystems as Competitive Advantages

Leading an ecosystem is the dominant form of competitive advantage in high-tech. It helps tech companies create what Warren Buffett calls an ‘economic moat‘.

I love Buffett’s medieval metaphor.

What does it mean?

Social network. Marketplace. SaaS. These buzzwords are no longer synonyms of massive business opportunities.

The gold rush has already happened.

But a new business model has emerged.

Market-networks are hybrid animals: part social network, part marketplace, part SaaS. [1]

• It’s a social network. Professionals use profile pages to showcase their work and demonstrate their credibility. They also connect with each other and build relationships.
• It’s a marketplace. Professionals come online together to find other parties with whom they can do business.
• It’s a SaaS tool. Professionals use the tools on the top of the marketplace to negotiate, do the job, or manage the paperwork.

New technology, change of consumers’ behavior, or aggressive emerging competition. Why do established companies often struggle to respond to major discontinuities in their operating environment? Where does this lack of strategic agility come from?

1. Bureaucracy

A bureaucratic environment prevents organizations from anticipating new opportunities. A slow decision-making process and lack of relevant information are two common symptoms.

During a talk at the London Business School, Jack Welch emphasized that ‘at GE we hate bureaucracy’ because it makes decision-process burdensome. Robert Townsend, former CEO of Avis, recommended that instead ‘all decisions should be made as low as possible in the organization’.