Biz Builder Mike

You can't sail Today's boat on Yesterdays wind - Michael Noel

Financial Services Professionals Say Lending Sector to Take A Year or Longer to Recover to Pre-COVID Levels: Survey

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The COVID-19 pandemic has accelerated the shift to digital with financial services, according to a recent report from TransUnion (NYSE:TRU), a financial services data platform and credit report provider.

The report notes that the Coronavirus outbreak sent “shockwaves” through the financial services sector and has “challenged the way lenders have historically operated.” TransUnion also mentioned that as more commerce begins to move to all-digital platforms, “empowered” consumers will have even more power or control in today’s global, technology-driven economy.

The company’s report pointed out that 40% of consumers are now using all-digital channels more frequently than before the pandemic began. The increase in the use of digital services is taking place at a time when 60% of consumers say that “the majority of their financial transactions are conducted via mobile applications.”

The report also revealed that one in three consumers are “engaging with their preferred financial institution multiple times a week via digital channels and roughly two in three are utilizing such platforms a minimum of once a week.”

Liz Pagel, SVP of consumer lending at TransUnion (and moderator of the Future of Lending roundtable discussion recently held by the company), stated:

“The pandemic has acted as a catalyst for lenders to adopt new technologies and stay competitive in this changing environment. A strong digital presence is now all but required to meet the evolving needs of consumers. Financial institutions that prioritize digital innovation to optimize their consumer interactions are likely to see the most upside over the long-term.”

Although the lending sector is going through a period of recovery following COVID, organizations are beginning to make plans for the future, the TransUnion team confirmed.

Around half of a group of 20 financial services professionals recently stated (during a Summit organized by TransUnion) that the lending sector could take at least a year or longer to “return to pre-COVID levels.” Despite these challenges, the financial services executives said their companies would be making additional investments in improving their digital capabilities because of changes in the business environment due to COVID.

Pagel added:

“Consumers are now accustomed to receiving highly customized retail offers through online channels. As a result, they now have higher expectations for their interactions with lenders. Lenders who integrate into the purchase moment, or who provide customized, relevant credit offers are seeing outsized growth.”

She also mentioned:

“As retail and financial services interactions continue their accelerated shift to online channels, lenders will need to continue to invest in seamless engagement, underwriting and servicing experiences – companies who can make every consumer touch point customized and smooth will win in the future.”

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Indonesian Fintech Investor, BRI Ventures’ CIO Says Company will Use $250 Million Fund to Create “Real Value,” Not Just High Valuations

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Indonesia is one of Southeast Asia’s largest markets for digital platforms and services. The country offers an attractive business environment and opportunities for investors who are interested in projects that aim to take advantage of fast-growing economies.

BRI Ventures, the investment division of Indonesia’s oldest bank, BRI, has a $250 million fund that it plans to allocate toward the development of initiatives that can create real value for the nation’s residents.

In statements shared with KrAsia, William Gozali, CIO at BRI Ventures, noted that his company believes in “real value” creation and they aim to become “strong value-add investors” for their portfolio companies.

BRI Ventures is a Jakarta based venture capital and private equity firm that’s supported by Bank Rakyat Indonesia. BRI Ventures is established as an independent business entity with its own funding processes.

Gozali noted that the VC company focuses on businesses that are generating consistent revenue and also those initiatives that can continue to grow their operations. He explained that for BRI Ventures, revenue means “validation.” He also mentioned that when people or organizations truly value your products and services and when they value your brand or company, then that’s when they’re willing to part with their hard-earned money. This is a sign of “real value creation,” Gozali said.

He also clarified that there can be times when valuation merely reflects the “perception of value, the future.” However, validation-revenue means “the real value created now,“ Gozali noted.

He told KrAsia that BRI Ventures is mainly focused on Fintech, education, agriculture, retail, transportation, and healthcare related businesses. The VC firm has made strategic investments in digital wallet provider LinkAja, SME-focused Fintech firm PayFazz, and peer to peer lending platforms Investree and Modalku.

Nicko Widjaja, CEO at PT BRI Ventura Investama (BRI Ventures), a subsidiary of BRI, had stated (in late June 2020):

“In today’s digital tech business ecosystem, the landscape has shifted from growth at all cost, to sustainable growth. The name unicorn has been adapted from Silicon Valley, which might no longer sit well with today’s ecosystem. Indonesia needs Sembrani, a symbol for Indonesian start-ups.” 

In May 2020, BRI Ventures (along with other firms) invested in Fintech firm Nium. The company said it would use the funds to support its product development efforts.

BRI Ventures had also launched Dana Ventura Sembrani Nusatara (Nusantara Venture Capital) in Jakarta on June 24, 2020.

The company will offer convenient access to venture capital for digital technology and Fintech firms, including SMEs.  Dana Ventura aims to accelerate the growth of local start-ups by offering digital technology-enabled products in offline and online environments.

Dana Ventura will mainly be funding seed-stage and Series A ventures.

Widjaja had noted (earlier this year):

“The philosophy behind BRI Ventures investment is ‘value over valuation’ in which our focus is seeking businesses with strong fundamentals. The funding will be channeled to start-ups that already produce products, have income from their operations and have a clear business strategy toward profit.”

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Claire Gillespie from Skills Development Scotland Says Training Programs for Workers can Help Fintech Sector Make Progress in Post COVID World

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Claire Gillespie, Digital Technology Skills Manager at Skills Development Scotland, recently explained that apprenticeships or training programs can really help the Fintech sector with making a recovery and also substantial progress after the pandemic has passed (even though it’s still not clear if/when this will happen).

The COVID-19 crisis has forced many companies to re-evaluate their business strategies. Many more individual consumers and companies are conducting transactions online because physical business locations had been shut down due to nationwide lockdowns in many countries throughout the world.

Gillespie tells DIGIT:

“Despite the many economic and (and health) challenges, the tech industry – and fintech in particular – remains relatively resilient and employers are still looking to recruit. But what might get lost during the current crisis is the need to attract new entrants into the industry, and the provision of the training and support they need to help us – and you – fill the skills gap in tech.”

She added:

“While we understand that employing and training new starts can sometimes be time-consuming and costly, apprenticeships offer an ideal solution. You get passionate and motivated talent who bring fresh eyes and energy to your business, and they essentially hit the ground running, contributing to your bottom line from day one as they put into practice what they learn.”

Gillespie explains that training programs can be for everyone, not just for people starting out their careers. She also notes that work-based learning programs may be good for upskilling or reskilling staff members who have already been working at a company for a long time. She also mentions that if job requirements change, then an appropriate technology apprenticeship can help with reskilling experienced professionals.

She further noted that the Coronavirus crisis has created new challenges and she thinks that the technology sector has the potential to respond effectively. She pointed out that the “No One Left Behind” digital campaign and Scotland’s Tech Army are both good examples of initiatives that can help train professionals for jobs of the future.

Gillespie confirmed that her organization is offering graduate-level apprenticeship programs in Cybersecurity, Data Science, IT (Software Development and other areas), Digital Applications, Data Analysis, among others.

As reported recently, a Chartered Fintech Professional Qualification will be offered to financial tech employees working in China and Singapore.

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