LEXPERT MAGAZINE
|
SEPTEMBER 2016 59
| IN-HOUSE ADVISOR – FINTECH |
Mogo, which has surpassed one million
loans since its founding in 2006 and raised
$50 million in a 2015 Toronto Stock Ex-
change initial public offering, stands for
"money on the go." It's aimed at young
people who want to avoid bank branches.
"We can take what is an 11-day loan pro-
cess at a bank and do it in as little as three
minutes," says Dave Feller, the company's
CEO. "Millennials, who are looking for a
different kind of experience, would choose
solutions of that kind from a new tech
company over solutions that come from a
traditional institution."
A survey by Javelin Strategy & Research
found that 40 per cent of Americans with
bank accounts visited their branch weekly
in 2010, while only nine per cent resort-
ed to mobile transactions. By 2014, the
branch visits fell to 28 per cent even as mo-
bile banking tripled to 27 per cent.
Companies like Mogo exploit the user
experience. "Fintech seeks to improve the
user experience by creating more efficien-
cies in the market, lower costs per transac-
tion, more transparency for the user, and
greater access and a wider range of offerings
to the consumer," Ling says.
Fintech, of course, has been around
longer than blockchain, which is merely
fintech's vanguard iteration. But what
Ethereum and blockchain's development
have done is force financial institutions to
take notice. "A lot of incumbents ignored
the rumblings and did not innovate, so the
start-ups started to fill the gaps in the mar-
ket and got some real traction," Ling says.
"Now the financial-services industry is re-
acting by trying to set up innovation labs."
Large organizations, however, tend to be
slow and inefficient. "ey're not really set
up to be innovative, so the innovation labs
are actually a second phase," Ling explains.
"e first phase is to co-opt the start-ups."
It's already happened: ING Direct
Canada, founded in 1997, one of the first
online banking services, secured two mil-
lion customers and US$37.6 billion in as-
sets before Scotiabank bought it for $3.13
billion in 2012.
Smart contracts are a form
of a program that gives certain
conditions and outcomes to
money. If there's a transaction
between two people, this
program can be used to help
verify the product or service
and whether or not it was
fulfilled. Once it has been
verified, it can be transferred
to the person's account.
>
ALEX AND DON TAPSCOTT,
BLOCKCHAIN REVOLUTION
