Digital disruption is on top of everyone’s agenda and both the challenge and opportunities from Fintech – short for financial technology - is finally dawning on the global financial sector.
Established financial institutions are now being challenged by both smaller start-ups and technology giants such as China’s Alibaba aiming to capture some of the banks’ business with innovative technology led solutions.
Global investment in fintech has more than tripled in the past five years. And a recent McKinsey report, found that competition from new technology is expected to reduce the total profit within consumer finance by a staggering 60 percent by 2025.
Recently, the CEO of Goldman Sachs, Lloyd Blankfein, clearly said that Goldman Sachs now should be regarded as a technology firm.
This is just a snapshot of the transformational changes taking place in today’s financial sector but if established finance institutions fail to focus on technology innovations, this will hugely hinder the profitability and viability of their businesses in the long run. That is why it is crucial to invest in the development of technology capable of disrupting the market.
Since we established Saxo Bank back in 1992 our focus has been on technology disruption.
We came across the internet at an early stage and quickly realised that developing an online trading platform was the perfect opportunity for a small trading bank to differentiate itself from the rest of the industry. Today, Saxo has clients in 180 countries, clients who can trade more than 30,000 financial instruments on our online trading platforms in 25 different languages.
We have always known that focusing on online trading and investment, putting technology at the heart of our business, was the way for us to grow. We like to say that Saxo was practicing fintech before the fintech term was even coined.
At the same time we increasingly see ourselves more of an enabler rather than a competitor to fintech start-ups globally. For example, Saxo Bank’s Open API project is harnessing the innovative spirit of a whole new wave of fintech companies by enabling third-party institutions and developers to build on Saxo’s software.
Also, a large number of financial institutions are choosing to buy rather than build their technology, deciding to outsource it to specialist providers like Saxo. White label partnerships are a fundamental part of Saxo Bank’s business, providing partners with reliable, sophisticated and cost-efficient access to our technology platform and associated services. Today, we have more than 100 financial institutions deploying Saxo’s trading technologies.
Invest heavily and consistently in technology
The discussion around fintech tends to have solutions for payments and lending at centre stage. Rightly so – Saxo has some very interesting solutions emerging in these areas. But in our view the next area for digital disruption in the financial sector is wealth and asset management. Today, traditional and outdated legacy solutions mean that asset management can be slow, complex, expensive, and can lack transparency.
When Saxo Bank was founded in the 1990s, trading foreign exchange was costly and inefficient; today it has much simpler and faster operation traders only pay a fraction of what they did back then. We believe a similar disruption will soon happen within asset management.
Digitizing asset management to enable private individuals to have their funds administered on terms which, to date, have been reserved for professional and institutional investors is high on the Saxo agenda. Our aim is to offer clients the ability to tap into some of the world’s largest asset managers easily, instantly and at a much lower cost with full transparency.
Saxo will continue to dare to disrupt. We have done so for almost 25 years and I look forward to the coming years where fintech advancements will accelerate changes, remove blocks to greater market adaption, reduce cost and complexities and unlock significant new opportunities in this dynamic sector.