A financial conference held in Tel Aviv this week focused on the relationship between financial institutes and technological developments
John Ben Zaken
March 11, 2016, 10:44 am
Financial institutes now understand the power of FinTech technology and use it to generate a competitive advantage and develop novel financial services. Innovative technologies that mostly contain smart algorithms and complex processes have entered the financial field and have begun ‘gnawing’ at traditional financial entities. This began with the Bitcoin based on the BlockChain infrastructure – meaning payment technologies, smart insurance engines, digital non-banking consumer crediting processes, and so on.
If previously, at the outset, financial institutes were against the new forces – calling them Disruptors – recently these same institutes have recognized the power of FinTech technology. They understood that it is possible, and even necessary, to collaborate with the new technologies to reach new business locales. In this way, for instance, bank sites can make use of smart algorithms to improve customer service and receive up-to-date financial data on topics of potential interest to the customer.
Peri Feuerstein, VP of Business Development at Aman Group, says that “Just last week it was published that Bank Leumi invested some ten million GBP in a FinTech company dealing in non-bank consumer crediting in Britain”. He added that, “Currently, financial banking institutes and others in Israel are looking into possibilities of providing non-bank crediting (P2P) on their digital platforms. It is also possible to see a change in the world at large – recently the largest bank in the USA began an experiment with 2,200 customers using a BlockChain protocol and infrastructure”.
What’s happening in the back yard?
“Israel’s financial market is a very interesting market. Recently we have seen a very clear connection between Israel’s being a very technological country and the activities of the regulator and the government. At Aman Group and our Financial Application Division we have been exposed to market demands to bring in new technologies to further improve customer service, reduce operation costs by using advanced digital infrastructures, and so on”.
Clearly, this past year has seen an increase in everything related to crowd funding and non-bank crediting in Israel and the world. How does this connect to the FinTech technologies?
“In recent years we can see an increase in the number of people looking for new alternatives in the field of finance due to the low interest rates offered by the banks. Both borrowers and creditors have discovered a new world of possibilities to receive the loans and credits they require. This is enabled through a variety of financial technological products that allow various investors to manage their portfolios the way they see fit. Peer-to-peer lending companies are not subject to regulation like banks are and their operation costs are very low seeing as they rely on innovative internet models. This means they can make sure their clients pay less and earn more. They even receive support from the regulator who encourages crowd funding models that generate competition with the banks and so allow the general public to free themselves of their chains. The crowd funding market is developing and is becoming more and more significant in the alternative money industry that serves private customers as well as small and mid-sized organizations. Business loans and receipt trade play an important role in the funding of thousands of small and mid-sized companies, while the increase in loans to consumers challenges traditional banking”.
How is the use of FinTech technologies among small investors and financial advisors expressed?
“The market currently offers a range of technological solutions comprised of modern systems that assist small investors and financial advisors to monitor and measure the performance of different types of assets over time, thereby guaranteeing the highest possible return on the portfolios they manage. Moreover, given the existing options and low returns possible from monetary deposits, small investors can now select alternative investments in order to achieve more tangible results”.