'As Fintech continues its progress around the world, new platforms emerge on a daily basis. Crowdfunding for Real Estate, peer to peer with asset backed loans, sponsor led syndicates. You’ve seen the statistic, there’s hundreds or thousands in different verticals and segments. Some represent novel new upstarts with their new niche or focus and some represent incumbents digitalizing their value chains using online tools. It's easy to think, that there are too many platforms.
At the same time, a competing concept is the lack of connectivity and dominant isolation. Deals are often done in silo’s, syndication and deal sharing are rare and confined to whats in the proximity and cooperation and specifically its expansion is often a lesser priority, than getting the deal done. This isn’t the way a mature market works and is a characteristic of where the current market situation stands.
In the global digitalization of the financial sector as a whole, the need for connective tissue is critical for the lowering of friction in transactions and bringing efficiency to the value chains. It's also a natural evolution of partnerships and cooperation around the world, which has often been limited to organic growth.
More Platforms, Less Silos
What is a ‘platform’? Is it something tangible like a product in itself or is it an enabler? I strongly believe it is an enabler, particularly an enabler in the digitalization of deal making processes more efficient from origination and capital acquisition to closing and monitoring, including some of the cumbersome processes like client or deal on boarding, verification and compliance. We believe deal makers from each asset class and asset strategy will become enablers in entering the digital market and find a broader ecosystem to access for more efficient deal making for their long term strategies.
The concept of this ‘platform’ as an enabler fits directly as a core in businesses strategies, and sits at the very heart of deal making. The ‘platform’ is not a strategy in itself, at the end of the day it is a tool and an enabler for the company’s overall vision, making transactions and matches happen in the best way with the best outcome.
Stage of the Ecosystem - Beyond Silo’s to Collaboration
Stage 1: The digitalization of finance is well underway and new digital tentacles are making their way to the market as new origination tools or deal making mechanisms. The first stage for many is the rollout of a new market model and attain a certain level of success using that model in the market. This requires adaptation from the company’s operating models and maybe more importantly a change in mentality in approaching the market. Alas this is how a ‘silo’ is created, yet this is just the first wave of the market.
Stage 2: In the second stage, we will see more cooperation and partnerships also replicated with digital tools online. From deal sharing and syndication, to shared knowledge tools and market insight, existing partnerships will find ways to leverage their cooperation also in the digital domain with more efficiency and resiliency in their approach. This also means an adoption of offline to online, where the value chain becomes more efficient and seamless.
In the global digitalization of the financial sector as a whole, the need for connective tissue is critical for the lowering of friction in transactions and bringing efficiency to the value chains. It's also a natural evolution of partnerships and cooperation around the world, which has often been limited to organic growth.
More Platforms, Less Silos
What is a ‘platform’? Is it something tangible like a product in itself or is it an enabler? I strongly believe it is an enabler, particularly an enabler in the digitalization of deal making processes more efficient from origination and capital acquisition to closing and monitoring, including some of the cumbersome processes like client or deal on boarding, verification and compliance. We believe deal makers from each asset class and asset strategy will become enablers in entering the digital market and find a broader ecosystem to access for more efficient deal making for their long term strategies.
The concept of this ‘platform’ as an enabler fits directly as a core in businesses strategies, and sits at the very heart of deal making. The ‘platform’ is not a strategy in itself, at the end of the day it is a tool and an enabler for the company’s overall vision, making transactions and matches happen in the best way with the best outcome.
Stage of the Ecosystem - Beyond Silo’s to Collaboration
Stage 1: The digitalization of finance is well underway and new digital tentacles are making their way to the market as new origination tools or deal making mechanisms. The first stage for many is the rollout of a new market model and attain a certain level of success using that model in the market. This requires adaptation from the company’s operating models and maybe more importantly a change in mentality in approaching the market. Alas this is how a ‘silo’ is created, yet this is just the first wave of the market.
Stage 2: In the second stage, we will see more cooperation and partnerships also replicated with digital tools online. From deal sharing and syndication, to shared knowledge tools and market insight, existing partnerships will find ways to leverage their cooperation also in the digital domain with more efficiency and resiliency in their approach. This also means an adoption of offline to online, where the value chain becomes more efficient and seamless.
Stage 3: In the third stage, we will see new, digitally native partnerships emerge where the partnership itself originates in the digital domain. This stage is longer term and after a digital integration of new business models, however it will have lasting and profound impact on the market models where cooperation will allow for new types of mechanisms around shared or partly shared origination and syndication.
A Word on Trust
Trust often comes up in online transactions. How can we do business with people we don't trust? Obviously, no one can(?). However, it's a fundamental shift in how trust is established and using transparent, public and verifiable records for establishing trust should garner a better basis for decision making in the long run. Blockchain is a good example of how models may work in a 'trustless' environment.
Personal relationships are important and will continue to be important. If deals can be closed faster, more securely, efficiently, transparently and with a better result - who would disagree? This is what I believe it will come down to, online tools offering a new way of making deals happen better than before where the concepts of trust are even more crucial than before and established using new technologies and tools.
What’s the Missing Link?
It’s not a question of too many or too few silos, it's ultimately a question of connectivity and volume. As more deal makers and finance companies choose to embrace and adopt digital tools, they will get to leverage the connectivity between deal makers of various kinds and ultimately close deals in a new and more efficient way. More deal makers, more networks and more connectivity brings the world one more step closer and shortens the distance for parties to find one another and execute on mutually aligned deals and strategies.
This is a world many of us believe is in the making and further, passing the tipping point. Therefore it's easy to look back at all the R&D and market pilots so far as a step in this market realizing itself, just as markets in the past have gravitated toward increased efficiency. With that, new opportunities emerge.
A Word on Trust
Trust often comes up in online transactions. How can we do business with people we don't trust? Obviously, no one can(?). However, it's a fundamental shift in how trust is established and using transparent, public and verifiable records for establishing trust should garner a better basis for decision making in the long run. Blockchain is a good example of how models may work in a 'trustless' environment.
Personal relationships are important and will continue to be important. If deals can be closed faster, more securely, efficiently, transparently and with a better result - who would disagree? This is what I believe it will come down to, online tools offering a new way of making deals happen better than before where the concepts of trust are even more crucial than before and established using new technologies and tools.
What’s the Missing Link?
It’s not a question of too many or too few silos, it's ultimately a question of connectivity and volume. As more deal makers and finance companies choose to embrace and adopt digital tools, they will get to leverage the connectivity between deal makers of various kinds and ultimately close deals in a new and more efficient way. More deal makers, more networks and more connectivity brings the world one more step closer and shortens the distance for parties to find one another and execute on mutually aligned deals and strategies.
This is a world many of us believe is in the making and further, passing the tipping point. Therefore it's easy to look back at all the R&D and market pilots so far as a step in this market realizing itself, just as markets in the past have gravitated toward increased efficiency. With that, new opportunities emerge.
About the author - Markus Lampinen
Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide - including the SEC, the European Commission and Italian regulator CONSOB - for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).
Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide - including the SEC, the European Commission and Italian regulator CONSOB - for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).
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