2013: The Year of Digitally Native Financial Services?

2013 will see a host of digitally native financial services firms start to take market share from traditional retail banks. Unlike vertically-integrated ‘Old Finance’ institutions with high fixed costs, these ‘Digitally Native’ challengers are built from the ground combining the philosophies of bank 2.0 and social 2.0.

“New financial institutions such as Fidor Bank and Holvi are designed for the digital consumer: they focus on a design-led user experience, transparency and simplicity. Fidor Bank provides banking services for the social generation – interest rates are dictated by its number of Facebook likes and a single interface shows all your holdings from precious metals to virtual currencies like World of Warcraft Gold.

Holvi offers checking accounts with intuitive interfaces that are designed from the ground up for the internet. Its USP is that users can easily set up multiple accounts for different group activities – e.g. a joint account for house sharers to pay bills, for a local association working on a project, or even for a fully-fledged business – with controls, budgeting tools and real-time balances (unlike online banking services from most retail banks today). While it is not a ‘bank’ in the legal sense of the word, it offers a banking experience for the only part that matters to users, the front end.

2013 will also see a range of financial technology firms begin to strip away users from niche services traditionally offered by banks. In the international money transfer sector, for example, companies such as The Currency Cloud and TransferWise are offering low-cost, efficient cross-border payments, for businesses and consumers respectively.

Some of these Digitally Native financial institutions are already successful. Holvi has proven a hit with consumers in Finland and will shortly be rolling out to the rest of Europe. Germany’s Fidor Bank has 250,000 live customers but operates on just over 30 employees. This spectacular growth is set only to continue in 2013 and traditional institutions will need to keep a continuous look over their shoulder, if they are to keep pace. In particular, the ability of these new institutions to acquire customers at the fraction of the cost of their larger competitors is likely to be a seriously disruptive force in the industry.

Udayan Goyal, founder of Anthemis Group.

Udayan is one of the most respected deal-makers in the Fintech space, bringing exceptional domain expertise and a global “who’s-who” network of industry professionals and statesmen.Founder of Anthemis Group SA and of corporate boutique FT Advisors, Udayan has completed over 200 deals in the Fin Tech space to date, including a number of recent flagship transactions such as Worldpay, Interswitch and Network International.

He was formerly the Managing Director and Global Head of Financial Technology Advisory at Deutsche Bank AG in the Global Financial Institutions Group based in London. Prior to Deutsche, Udayan had specific responsibility for developing the pan-European specialty finance practice of Credit Suisse with a focus on financial technology.

Born in New Delhi, India, Udayan graduated from Trinity College, University of Cambridge and was named one of the Financial News Top 100 Rising Stars in both 2009 and 2010. He’s also part of the Swift Enablers, driving innovation in the banking industry.

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