Collaborate or Succumb.

Collaborate or Succumb.

From the perspective of the individual, collaboration is both an intellectual and an emotional act: it implies the realization that knowledge is a social construct (rather than a privilege of a few) and a mindset shift from entitlement to vulnerability.

From the perspective of the organization, collaboration is the only path forward to ensure a deep understanding of what needs to be solved to effectively evolve. The collective resources of a diverse group are required to design solutions that matter to clients, and the necessary community support to do what was not done before but needs to be done.

How may an organization start to change gears towards collaboration? 

  1. Leverage meetings to discuss client pain-points rather than use them as show-and-tell venues
  2. Make sure your lay-out allows employees to see each other and prompts them to hold conversations rather than encourage communication only through emails ccing too many people and 
  3. Ask customer-facing employees their opinions and suggestions rather than trying to design solutions from the ivory tower.

In summary, in the long run collaboration is the chance for organizations to meaningfully sustain and increase relevance for clients, employees and investors.

Put the Enterprise Collaboration Focus Where it Belongs: The People

Put the Enterprise Collaboration Focus Where it Belongs: The People


#collaboration #crowdsourcing #wisdomofthemany

Companies like Jive, Yammer, Telligent and more promised to take social into the enterprise to drive a long list of business benefits, from improving productivity to fostering company culture, to boosting the bottom line.

Ten years later, Facebook and LinkedIn remain the 400-pound gorillas of the consumer social market, with tremendous growth, engagement and market value.

On the other hand, most enterprise social networks have been acquired and faded into the background as new digital workplace tools proliferated. New collaboration apps, notably Slack, took their place and their cache, although it’s beginning to look as if the newcomers may suffer a similar fate.

Why Did Consumer Social Networks Thrive While Workplace Counterparts Stalled?

One view is that consumer social networks like Facebook and LinkedIn thrived because they focused on people, while enterprise social networks put their focus more on the content being shared. Community forums. Document collaboration. Group messaging. All of these are good things.

In fact, the teamwork they enable is the heart of enterprise social. But these elements alone can’t make a community thrive without an understanding of the people driving it. The stickiness of Facebook and LinkedIn stems from the “network” part of social network: the relationships between people, with their content as a supporting function of those relationships.

To further complicate matters, wrangling all that content has become increasingly difficult. The communication and collaboration enterprise social networks enable provides real value. One company, for instance, found its enterprise community helped reduce the cost of sales by $2 million, while another increased employee satisfaction by 10 percent.

But eventually, like Facebook and LinkedIn, every organization ends up suffering from digital crowding. There is simply too much stuff in too many places for a human brain to comprehend. Searching for information requires an out-of-pattern activity that delays output and pulls our attention in a million different directions. Instead of fostering productivity and harnessing corporate memory, it hinders it. Eventually, this whittles away at any collaboration app’s adoption until the next shiny tool is brought in — only to suffer the same fate as the cycle continues.

Is Collaboration in the Digital Workplace a Lost Cause?

Not at all. To succeed, interactive intranets and enterprise communities must learn from their consumer counterparts and shift their focus from content to emphasize their organization’s greatest asset: its people. While this may sound more philosophical than tactical, it’s anything but. Creating a network based on relationships requires technology that both understands the connections between members of the network and dynamically personalizes their experience based on those connections. As more people and content enter the community, and relationship signals dial up or dial down with each interaction, the network should become even more powerful.

Bringing Graph Technology into the Collaboration Mix

One of the most powerful ways to achieve this is through graph database technology. Amazon Neptune is one example, and describes the concept well: it works “with highly connected data sets … optimized for storing billions of relationships and querying the graph.” When applied to an enterprise community, a graph database enables the platform to go far beyond the relatively simple constructs of “are you a friend/connection? (yes or no)” to understand much deeper levels of relationships, such as:Organization chart relationships.Explicit personal and professional relationships that aren’t hierarchical, with differences between friends, team members, colleagues, mentors/mentees, doctors/patients, etc.Implicit relationships, where commonalities exist between people based on their skills, location or activities, but without formal connections.By putting people at the core of the collaboration experience, graph databases can help enhance and even transform traditional content and collaboration capabilities into a richer set of people-to-people, people-to-content or content-to-content experiences. Take search: When your platform can understand what you work on and who you work on it with, its ability to deliver meaningful results will be dramatically improved. It can parse huge data sets about individuals as well, so it will “know” you too, not just your relationships. Combined with emerging technologies like text analytics and deep learning, that knowledge will enable semantic search that understands your context and finds what you need, when you need it, rather than just processing keywords.Search, of course, is only one example. A people-powered engine can help improve all of the standard enterprise collaboration use cases and makes new ones possible. By intelligently leveraging the connections between people and their work activities, platforms should prevent the creation of duplicate work and enhance commenting, versioning and more. Graph databases can also potentially streamline the chat experience, both within your primary digital workplace and externally, by curating conversations to serve up what’s most important and weed out the rest. 

Finding Knowledge in the Crowd

If I sound excited about these possibilities, it’s because I am. After years of watching enterprise social “innovation” translate to new features that barely move the needle, the technology has finally caught up to the vision. Big data has brought us big opportunity. With the intelligence of a people graph, enterprise communities and interactive intranets can now facilitate true collaboration and connection, and in turn, deliver results around engagement, alignment and retention. The modern enterprise social network will no longer contribute to digital crowding — it will help you find the most valuable people and knowledge in the crowd.

Keeping Up With New Work Culture

Keeping Up With New Work Culture

May 15, 2017: Weekly Curated Thought-Sharing on Digital Disruption, Applied Neuroscience and Other Interesting Related Matters.

By Scott Scalon, Hunt Scalon Media

Curated by Helena M. Herrero Lamuedra

Companies are facing a radically shifting context for the workforce, the workplace, and the world of work, and these shifts have already changed the rules for nearly every organizational people practice, from learning and management to executive recruiting and the definition of work itself. Every business leader, no matter their function or industry, has experienced some form of radical work transformation, whether it be digitally in the form of social media, for example, demographically, or in countless other ways. Old paradigms are out, new ways of thinking are in — and talent, that one ‘commodity’ we’re all after is caught up in the middle of it all.

Almost 90 percent of HR and business leaders rate building the organization of the future as their highest priority, according to Deloitte’s latest Global Human Capital Trends report, “Rewriting the Rules for the Digital Age.” In the report, Deloitte issues a call-to-action for companies to completely reconsider their organizational structure, talent and HR strategies to keep pace with the disruption.

A Networked World of Work

“Technology is advancing at an unprecedented rate and these innovations have completely transformed the way we live, work and communicate,” said Josh Bersin, principal and founder, Bersin by Deloitte, Deloitte Consulting. “Ultimately, the digital world of work has changed the rules of business. Organizations should shift their entire mind-set and behaviors to ensure they can lead, organize, motivate, manage and engage the 21st century workforce, or risk being left behind.”

With more than 10,000 HR and business leaders in 140 countries weighing in, this massive study reveals that business leaders are turning to new organization models, which highlight the networked nature of today’s world of work. However, as business productivity often fails to keep pace with tecnological progress, Deloitte finds that HR leaders are struggling to keep up, with only 35 percent of them rating their capabilities as ‘good’ or ‘excellent.’

“As technology, artificial intelligence, and robotics transform business models and work, companies should start to rethink their management practices and organizational models,” said Brett Walsh, global human capital leader for Deloitte Global. “The future of work is driving the development of a set of ‘new rules’ that organizations should follow if they want to remain competitive.”

Talent Acquisition: Biggest Issue Facing Companies

As the workforce evolves, organizations are focusing on networks of teams, and recruiting and developing the right people is more consequential than ever. However, while Deloitte finds that cognitive technologies have helped leaders bring talent acquisition into the digital world, only 22 percent of survey respondents describe their companies as ‘excellent’ at building a differentiated employee experience once talent is acquired. In fact, the gap between talent acquisition’s importance and the ability to meet the need increased over last year‘s survey.


How Else the World of Work Is Changing

It is, indeed, a landscape of shifting priorities, and nowhere are we seeing this unfold more than among the group that matters most: job candidates. Five years ago, benefits topped their list of preferences. Today it’s culture and flexibility. Organizations need talented employees to drive strategy and achieve goals, but finding, recruiting and retaining people is becoming more difficult. While the severity of the issue varies among organizations, industries and geographies, it’s clear that this new landscape has created new demands. And organizations are scrambling.

It is critical, according to the report, to take an integrated approach to building the employee experience, with a large part of it centering on ‘careers and learning,’ which rose to second place on HRs’ and business leaders’ priority lists, with 83 percent of those surveyed ranking it as ‘important’ or ‘very important.’ Deloitte finds that as organizations shed legacy systems and dismantle yesterday’s hierarchies, it’s important to place a higher premium on implementing immersive learning experiences to develop leaders who can thrive in today’s digital world and appeal to diverse workforce needs.

The importance of leadership as a driver of the employee experience remains strong, as the percentage of companies with experiential programs for leaders rose nearly 20 percentage points from 47 percent in 2015 to 64 percent this year. Deloitte believes there is still a crucial need, however, for stronger and different types of leaders, particularly as today’s business world demands those who demonstrate more agile and digital capabilities.

Time to Rewrite the Rules

As organizations become more digital, leaders should consider disruptive technologies for every aspect of their human capital needs. Deloitte finds that 56 percent of companies are redesigning their HR programs to leverage digital and mobile tools, and 33 percent are already using some form of artificial intelligence (AI) applications to deliver HR solutions.

“HR and other business leaders tell us that they are being asked to create a digital workplace in order to become an ‘organization of the future,’” said Erica Volini, a principal with Deloitte Consulting LLP, and national managing director of the firm’s U.S. human capital practice. “To rewrite the rules on a broad scale, HR should play a leading role in helping the company redesign the organization by bringing digital technologies to both the workforce and to the HR organization itself.”

Deloitte found that the HR function is in the middle of a wide-ranging identity shift. To position themselves effectively as a key business advisor to the organization, it is important for HR to focus on service delivery efficiency and excellence in talent programs, as well as the entire design of work using a digital lens.

How Jobs Are Being Reinvented

While many jobs are being reinvented through technology and some tasks are being automated, Deloitte’s research shows that the essentially human aspects of work – such as empathy, communication, and problem solving – are becoming more important than ever.

This shift is not only driving an increased focus on reskilling, but also on the importance of people analytics to help organizations gain even greater insights into the capabilities of their workforce on a global scale. However, organizations continue to fall short in this area, with only eight percent reporting they have usable data, and only nine percent believing they have a good understanding of the talent factors that drive performance in this new world of work.

One of the new rules for the digital age is to expand our vision of the workforce; think about jobs in the context of tasks that can be automated (or outsourced) and the new role of human skills; and focus even more heavily on the customer experience, employee experience, and employment value proposition for people.

This challenge requires major cross-functional attention, effort, and collaboration. It also represents one of the biggest opportunities for the HR organization. To be able to rewrite the rules, HR needs to prove it has the insights and capabilities to successfully play outside the lines.

How to ensure future brain technologies will help and not harm society

How to ensure future brain technologies will help and not harm society

May 9, 2017: Weekly Curated Thought-Sharing on Digital Disruption, Applied Neuroscience and Other Interesting Related Matters.

By Written by P. Murali Doraiswamy -Professor, Duke University, Hermann Garden – Organisation for Economic Co-operation and Development, and David Winickoff – Organisation for Economic Co-operation and Development

Curated by Helena M. Herrero Lamuedra

Thomas Edison, one of the great minds of the second industrial revolution, once said that “the chief function of the body is to carry the brain around.” Understanding the human brain – how it works, and how it is afflicted by diseases and disorders – is an important frontier in science and society today.

Advances in neuroscience and technology increasingly impact intellectual wellbeing, education, business, and social norms. Recent findings confirm the plasticity of the brain over the individual’s life. Imaging technologies and brain stimulation technologies are opening up totally new approaches in treating disease and potentially augmenting cognitive capacity. Unravelling the brain’s many secrets will have profound societal implications that require a closer “contract” between science and society.

Convergence across physical science, engineering, biological science, social science and humanities has boosted innovation in brain science and technological innovation. It offers large potential for a systems biology approach to unify heterogeneous data from “omics” tools, imaging technologies such as fMRI, and behavioural science.

Citizen science – the convergence between science and society – already proved successful in EyeWire where people competed to map the 1,000-neuron connectome of the mouse retina. Also, the use of nanoparticles as coating of implanted abiotic devices offers great potential to improve the immunologic acceptance of invasive diagnostics. Brain-inspired neuromorphic engineering aims to develop novel computer systems with brain-like characteristics, including low energy consumption, adequate fault tolerance, self-learning capabilities, and some sort of intelligence. Here, the convergence of nanotechnology with neuroscience could help building neuro-inspired computer chips; brain-machine interfaces and robots with artificial intelligence systems.

Future opportunities for cognitive enhancement for improved attentiveness, memory, decision making, and control through, for example, non-invasive brain stimulation and neural implants have raised, and shall continue to raise, profound ethical, legal, and social questions. What is societally acceptable and desirable, both now and in the future?

At a recent OECD workshop, we identified five possible systemic changes that could help speed up neurotechnology developments to meet pressing health challenges and societal needs.

1. Responsible research

There is growing interest in discussing and unpacking the ethical and societal aspects of brain science as the technologies and applications are developed. Much can be learned from other experiences in disruptive innovation. The international Human Genome Project (1990-2003), for example, was one of the earlier large-scale initiatives in which social scientists worked in parallel with the natural sciences in order to consider the ethical, legal and social issues (ELSI) of their work.

The deliberation of ELSI and Responsible Research and Innovation (RRI) in nanotechnologies is another example of how societies, in some jurisdictions, have approached R&D activities, and the role of the public in shaping, or at least informing, their trajectory. RRI knits together activities that previously seemed sporadic. According to Jack Stilgoe, Senior Lecturer in the Department of Science and Technology Studies, University College London, the aim of responsible innovation is to connect the practice of research and innovation in the present to the futures that it promises.

Frameworks, such as ELSI and RRI should more actively engage patients and patient organisations early in the development cycle, and in a meaningful way. This could be achieved through continuous public platforms and policy discussion instead of traditional one-off public engagement and the deliberation of scientific advances and ELSI through culture and art.

Research funders – public agencies, private investors, foundations, as well as universities themselves – are particularly well positioned to shape trajectories of technology and society. Through their funding power, they have unique capacity to help place scientific work within social, ethical, and regulatory contexts.

It is an opportune time for funders to: 1) strengthen the array of approaches and mechanisms for building a robust and meaningful neurotechnology landscape that meaningfully engages human values and is informed by it; 2) discuss options to foster open and responsible innovation; and 3) better understand the opportunities and challenges for building joint initiatives in research and product development.

2. Anticipatory governance

Society and industry would benefit from earlier, and more inclusive, discussions about the ethical, legal and social implications of how neurotechnologies are being developed and their entry onto the market. For example, the impact of neuromodulatory devices that promise to enhance cognition, alter mood, or improve physical performance on human dignity, privacy, and equitable access could be considered earlier in the research and development process.

3. Open innovation

Given the significant investment risks and high failure rates of clinical trials in central nervous systems disorders, companies could adopt more open innovation approaches in which public and private stakeholders actively collaborate, share assets including intellectual property, and invest together.

4. Avoiding neuro-hype

Popular media is full of colorful brain images used to illustrate stories about neuroscience. Unproven health claims, including those which give rise to so-called ‘neuro-hype’ and ‘neuro-myths’. Misinformation is a strong possibility where scientific work potentially carries major social implications (for example, work on mental illness, competency, intelligence, etc).

It has the potential to result in public mistrust and to undermine the formation of markets. There is a need for evidence-based policies and guidelines to help the responsible development and use of neurotechnology in medical practice and in over-the-counter products. Policymakers and regulators could lead the development of a clear path to translate neurotechnology discoveries into human health advantages that are commercially viable and sustainable.

5. Access and equity

Policymakers should discuss the socio-economic questions raised by neurotechnology. Rising disparities in access to often high-priced medical innovation require tailored solutions for poorer countries. The development of public-private partnerships and simplification of technology help access to innovation in resource-limited countries.

In addition to helping people with neurological and psychiatric disorders, the biggest cause of disability worldwide, neurotechnologies will shape every aspect of society in the future. A roadmap for guiding responsible research and innovation in neurotechnology may be transformative.

Designing Culture: Creating Design Aware Organizations

Designing Culture: Creating Design Aware Organizations

April 25, 2017: Weekly Curated Thought-Sharing on Digital Disruption, Applied Neuroscience and Other Interesting Related Matters.

By Linn Vizard

Curated by Helena M. Herrero Lamuedra

Design is becoming inextricably linked with the creation of products and services, especially within technology -but not only, as John Maeda’s annual design in tech report highlights. As the value proposition of design is gaining more traction, questions are arising about how design fits into companies, and why, when and how it should play a role. ‘Design culture’ is in part the idea that design can permeate the DNA of a company and its modus operandi.

Design works best when it operates as a holistically across an organization, that plays nicely with other functions and approaches. In order to do this, leaders need to build design cultures that are contextually appropriate and contextually aware. In tandem with this, there are some tried and testing ways to foster design culture.

What is Design Culture?

‘Design culture’ is a nebulous (and potentially trend driven!) term. Ryan Rumsey, Director of Experience Design at EA, talked about design culture as “Organizational intent in identifying the core purpose of an activity before going out and trying to do something.” Linda Nakanishi, Design Director at Nascent, echoed this, and talked about the crucial role design plays in understanding the problem, user and organization before building something. One of the value propositions of design is that it can envision products and services that people truly need and love, by deeply researching user needs.

Tom Creighton, Design Director at Wealthsimple, had a slight reframe on the term design culture, preferring the term ‘design awareness.’ “Design aware company culture means giving teams the room to scope and discover a problem through the process, rather than having rigidly defined scope and requirements from day one,” said Creighton. This is an interesting reframe, which potentially shifts from the notion of a pervasive or monolithic seeming ‘design culture’ to one that allows space for recognition of the appropriate uses of design. It also emphasizes the role and responsibility of design in problem framing – making sure that we are building the right solution for the right problem. When a company uses design to ask why before building something, design culture is born.

So how do you know when a culture of design awareness exists in your workplace? For Creighton, the ‘un-scoped scope’ with clear desired outcomes is a function of design awareness. Similarly, for Nakanishi, it means that a design perspective becomes an inherent requirement of the work, even to the point of impacting the type of work and projects that the agency takes on. From Rumsey’s perspective, one clue that design culture exists is that people pause for a moment before they draft business requirement documents and roadmaps.

How to Foster Design Culture

Building something as ephemeral as culture is certainly easier said than done. How do you get to a place where design is valued and recognized as an important part of creating products and services? Nakanishi, Creighton and Rumsey elaborated on some of their strategies and tactics.

Make a clear value proposition: Leading a design function in an organization requires being able to articulate the value of the approach. It’s also crucial to bridge any potential disconnects between design teams and the management or leadership of a company. Creighton captured this really well, “Part of what I’ve discovered in my career is that certainly a lot of design culture is about practicing design and doing the work – but the thing that’s not often taught, that should be a core component, is how to explain the value of design to people who aren’t designers or aren’t design thinkers.” A common mistake among designers can be an over-emphasis on process rather than outcomes. Growing design culture requires a clear articulation of the value design brings in terms of the end game – whether that’s efficiency, revenue or user engagement.

Coalitions of the willing: Rumsey talked about the importance of finding willing partners and collaborators, who are excited about the possibility of using design to solve challenges. “It is difficult to take on design without shifting some of the operational models, and to do that you need to find champions who are working on smaller things,” said Rumsey. Part of the advantage of this approach is being able to demonstrate early successes, and grow the interest and curiosity around the approach. “It leads to people saying hey, how’d you do that, can you help me too?” says Rumsey. This is one way of using problem solving as a Trojan horse for design, sneaking it into the environment without being too directive or pushy.

Creating community: Culture is people, and all of the design leaders emphasised the importance of sharing knowledge within the design team and beyond. This can take the form of weekly design team meetups, or a broader team show and tell. There is something to be said for having really disciplined, organized check ins that are focused on product design, and this is part of what Creighton advocates for at Wealthsimple. On the other hand, while Nakanishi’s team does have design focused show and tell, they are experimenting with more cross-disciplinary sessions. “Through cross-discipline sharing, design culture will spread. At a project level when the full team is involved from the beginning, they will be exposed to the design discovery phase and they can contribute to the discussion.” said Nakanishi.

Design is not just for designers: Both Nakanishi and Rumsey mentioned the need to open design up beyond an exclusive club for those with explicit design roles. One approach Rumsey uses is to run design workshops over a lunch hour. He explains, “What I say is, ‘I’ll buy you a pizza and share with you how designers work.” No one wants to be ‘educated’ or lectured to, so this is a great strategy – get people to come for the pizza, and leave with the design bug! These opportunity workshops allow teams to explore design approaches themselves, as well as serving a clever dual function of allowing Rumsey to identify potential projects, partners and do some pre-scoping.

A Key Design Culture Enabler, and Blockers to Watch Out For

A key success criteria when growing a design function is having buy in from a high level. Without some executive or management team support, seeding and growing design culture can be an uphill battle. “If people at a higher level don’t see value in it, there is a risk that resources don’t get put towards design, for example not including research budget when scoping or not being willing to resource more than one designer to a project. In the past, I’ve pushed and struggled with this, and if it’s not supported it can’t grow,” said Nakanishi. In Creighton’s context, design as a key strategic differentiator means there is excellent support and buy in. “From an investment perspective, our offering is fairly conventional – the differentiator is the way in which we are offering them. The C suite has a huge awareness of design and the importance of design – the solutions we are coming up with are design solutions, not financial ones.”

What about blockers to creating design culture? Resistance to change, a feeling that design is ‘not for me’, or misunderstanding of design are common themes. When Rumsey joined his organization, the word design was already being used, but in a different context – that of solution architecture. “This can lead to massive amounts of confusion around the word design. For example, people trying to understand what designers are accountable for, and what parts of the work should they be involved in?” said Rumsey. For organizations where design thinking is a new way of working, it can require lots of capacity building to get people onto the same page.

Designing Culture is a Team Sport

As Nakanishi put it, “Design culture is about having good people who can rally with you. It’s not about doing it all yourself, it’s about finding good people you can trust and do it together way – rallying together with other managers to grow the culture you want.”

Are you ready to start?

Disruption, Regulation, Consolidation… and Collaboration in the Ecosystem!

Disruption, Regulation, Consolidation… and Collaboration in the Ecosystem!

Mar 14, 2017: Weekly Curated Thought-Sharing on Digital Disruption, Applied Neuroscience and Other Interesting Related Matters

Bracing for seven critical changes as fintech matures

By Miklos Dietz, Vinayak HV, and Gillian Lee

Curated by Helena M. Herrero Lamuedra

For the past decade, fintech companies—technology firms that focus on financial products and services—have moved quickly, forcing incumbents to rethink their core business models and embrace digital innovations. But now, the fintech industry is itself maturing and entering a period of rapid change. Companies wondering how they will fit into this new era must first understand the forces that are pushing the changes.

While the industry will undoubtedly continue to expand as its customer base grows and investor appetite remains unsated, changes are imminent. Indeed, the very concept of what comprises fintech will shift. As the industry evolves, it will play a role well beyond financial products and services, individual companies will vie to become undisputed leaders by size and breadth, and ecosystems will develop that have a tight grip on customer loyalty.

This new fintech era is being shaped by changes in market conditions, new regulations, and shifts in consumer demands and behaviors. As a result, the industry, generally, is becoming more cautious, even as it becomes more diverse across technologies and products. McKinsey research and work with fintechs in many markets suggest seven critical aspects of this new environment that must be understood to thrive in the shifting market.

Expanding scope

The scope of products and services offered by fintechs is expanding rapidly. Where once companies focused on payment applications, lending, and money transfers, the industry’s reach has extended into more than 30 areas. The shift brings fintechs away from a focus on frontline activities to a broad engagement throughout the value chain. The new offerings cut across a wide swath of financial services: retail, wealth management, small- and midsize enterprises (SMEs), corporate and investment banking, and insurance.

Various fintechs using a variety of technologies are active in each of these areas. Some, for example robo-advisory systems that provide automated recommendations with little human input, use tested technologies to meet customer needs, while others pursue more experimental technologies, such as blockchain systems that track and store an expanding series of transactions to help reduce infrastructure costs and improve efficiency.

In addition, fintechs are moving beyond addressing a customer’s financial needs to offering a wider range of services, blurring the industry’s boundaries. For example, Social Finance, known generally as SoFi, began by offering financial products to students and young professionals and has since expanded to provide career coaching and networking services. Holvi Payment Services, a Finnish start-up acquired by Spanish financial group Banco Bilbao Vizcaya Argentaria (BBVA) in 2016, began by offering banking services to SMEs and expanded to provide complementary offerings, such as an online sales platform, bookkeeping services, expense-claims systems, and a cash-flow tracker.

Increasing diversity

The fintech industry is also becoming more diversified, with a wide variety of business models seen across geographies, segments, and technologies. One common model would be a start-up backed by venture-capital funding emerging to address a specific customer need.

For example, the US-based Stripe, one of the largest fintech players, was founded in 2011 to offer an improved online payment system and has attracted more than $300 million from venture-capital funds, including Founders Fund, Khosla Ventures, and Sequoia Capital.1 1. Leena Rao, “Stripe’s new funding makes it a $5 billion company,” Fortune, July 28, 2015, fortune.com. Stripe was one of the first fintechs to dramatically accelerate and improve the process merchants followed to accept payments online. While legacy payments companies needed five to seven days to set up a new merchant, Stripe gave merchants the chance to launch a website and start accepting payments within minutes.2 2. TechCrunch blog, “The story behind payment disruptor Stripe.com and its founder Patrick Collison,” blog entry by Derek Andersen, May 20, 2012, techcrunch.com. Another model would be a large technology company expanding into financial services. China’s Alibaba, one of the best-known examples of this model, started as a major e-commerce site and has moved into financial products, with its Alipay subsidiary boasting more than 800 million registered users in 2016. Another emerging model would be an established financial company creating its own fintech unit. For example, Ping An Insurance (Group) Company of China, China’s largest insurer by assets, launched a peer-to-peer service, Lufax, in 2012, and by 2016 the unit was valued at almost $19 billion.3 3. Gabriel Wildau, “Chinese P2P lender Lufax valued at $19bn in latest funding round,” Financial Times, January 18, 2016, ft.com.

Fintech pioneers, such as PayPal, are also adjusting their business models to encompass a wider range of services. PayPal, launched in the 1990s to provide a payment system for online purchases, then a new phenomena, has since expanded to provide instant lines of credit and mobile applications that locate nearby stores and restaurants that accept payment by PayPal.4 4. Mashable business blog, “PayPal mobile app lets you order ahead at restaurants,” blog entry by Todd Wasserman, September 5, 2013, mashable.com.

Along with diversified models, performance has also become highly variable among fintechs. Certain players have seen share prices fall more than 50 percent. At the other extreme, fintechs that retain the confidence of investors and customers have continued to see strong performance as reflected by share price and business growth. Among the examples, share price for IHS Markit, a financial information and data provider, rose by more than 20 percent over the 12 months ending October 2016. IHS Markit had shown consistently strong financial performance, with, for instance, adjusted third quarter 2016 revenue up 5 percent from a year earlier and its full-year margin forecast at about 36 percent.5 5. Q3 16 Earnings Supplemental Financials, IHS Markit, September 27, 2016, phx.corporate-ir.net.

Improving collaboration

Collaborative partnerships will become increasingly important as fintechs seek scale and traditional financial institutions seek digital expertise. While fintechs have developed applications that create improved customer experiences, many lack skills in customer acquisition and other fields needed to grow quickly. Incumbent banks, on the other hand, already have hard-won capabilities in these areas, but they will have to work harder to create a true digital enterprise.

Examples of such partnerships are already emerging. For example, in 2014 New York–based Moven and Australia’s Westpac announced an agreement to integrate Moven’s mobile financial-management tools with Westpac’s Internet-banking platform in New Zealand. Westpac hoped to use the tools to become the largest bank in the market, while Moven sought to expand into new markets.6 6. Westpac New Zealand REDnews business blog, “Westpac enters exclusive New Zealand partnership with financial services start-up Moven,” August 25, 2014, Westpac.co.nz.

Spain’s BBVA offers an example of an incumbent bank moving aggressively across several areas. BBVA joined data-analytics start-up Destacame to extend credit to the underbanked using Destacame credit scores built from utility-bill-payment histories. It is also working with FutureAdvisor, which focuses on robo-advisory services, to offer low-cost, enhanced financial-advisory services to help customers with portfolio optimization. In addition, BBVA and Dwolla, a payments company, have joined to offer BBVA customers accelerated payment services with low fees.

Impending consolidation

As the industry continues to mature, fintechs will likely enter a period of consolidation, with larger players turning to mergers and acquisitions to satisfy their expansion goals. For example, in 2015 PayPal announced the acquisition of Xoom, an international fund-transfer service, for $890 million. The acquisition was expected to allow PayPal to broaden its services into digital money transfer and management.

In another recent example, in 2015 peer-to-peer lender Prosper Marketplace spent $30 million to acquire BillGuard, later renamed Prosper Daily, an app that allows users to track their spending and credit. The move added personal-financial-management services to Prosper’s core refinancing and credit-rehabilitation offerings and provided a new channel for engaging with customers.10 10. TechCrunch blog, “Prosper Marketplace relaunches its BillGuard app under the Prosper brand,” blog entry by Jonathan Shieber, March 10, 2016, techcrunch.com.

Consolidation, which complements the collaboration trend, may force other changes in the market as well. For instance, banks may have to move quickly to identify acquisition targets before the most attractive are taken by competitors. They will also have to reconcile differences in corporate culture that can limit the upside from such mergers. The trend also offers fintech start-ups an alternative to initial public offerings for exit options.

Normalizing valuations

Valuations of fintechs are also normalizing as investors become more cautious and start favoring companies with proven track records. Examining 44 fintechs with valuations of more than $1 billion, McKinsey found that valuation growth has slowed considerably. Between 2014 and 2015, valuations for these companies grew on average by 77 percent, and then slowed to 9 percent from 2015 to 2016. Companies in the study cut across geographies and segments.

In the United States, where more than half the companies in the study were based, the shift was even more dramatic. While valuations for large US fintechs grew on average by 54 percent from 2014 to 2015, they not only did not grow but dropped by 7 percent from 2015 and 2016.

The shift toward normalized valuations was also noticeable in investment trends. One study looked at the 30 largest fintech investments by venture-capital funds in 2016 through August and found that more than half were later-stage funding deals. The data suggest investors are more interested in companies with proven business models.

Shifting regulations

Not surprising for a new industry, the regulatory regimes affecting fintechs are also evolving swiftly and will significantly influence how the industry develops. In many markets, regulators are playing a more proactive role in overseeing the industry, often encouraging its development, for instance by following a sandbox—or test and learn—approach that allows fintechs to experiment without impacting the entire financial system.

In the United Kingdom, for example, the country’s Financial Conduct Authority has launched Project Innovate, a program that guides technology start-ups through regulatory processes and pushes for speedy responses to applications and questions. Regulators are also increasingly involved in nurturing fintech clusters, organizing large educational and community-building events in many markets.

As regulators increasingly shape the evolution and growth of the fintech industry, it remains unclear how the costs of regulations will impact players, particularly early-stage start-ups. However, while regulators work toward balancing the risks to the financial-services sector, they are also eager to encourage innovation, and many have taken steps toward this goal.

Emerging ecosystems

As digital offerings become more mature and interconnected, vast ecosystems will develop that span multiple industries. In many instances, fintechs will become submerged in these ecosystems, representing, like many others, a component of a much broader digital network.

Ecosystems will likely develop to follow customer needs, rather than conform to traditional industry lines. Leaders in these ecosystems will need strong data-analytic capabilities to develop useful insights from the torrent of customer information available, and they will likely use fintechs and others to develop the system and extract maximum value. While data and analytic capabilities are crucial to leading an ecosystem, companies will also need demonstrated prowess in cybersecurity to credibly safeguard the huge amounts of potentially sensitive client data available in the system.

Already, ecosystem orchestrators are building advantageous data-analytic capabilities. For example, China’s Ping An established a big data–analytics platform in 2013 to improve cross-selling and customer migration. The platform is a critical component in reaching the company’s stated goal of “one customer, one account, multiple services, and multiple products.” Ping An is already benefiting from the use of this platform, with more than half of Ping An’s 109 million core finance customers successfully migrated and also using its online services as of 2016. Across all its platforms, the company has an Internet user base of 298 million people as of June 2016, presenting powerful opportunities for customer acquisition and channel migration.

Other examples of early ecosystems include Commonwealth Bank of Australia (CBA), which is building relationships with a broad customer base across different channels, using technology like MyWealth, a portfolio-management app; DailyIQ, a data-analytic app for SMEs; and Albert, a point-of-sale device for business owners.  Combined, these efforts can provide CBA access to rich data on customer-spending patterns, allowing it to build an ecosystem around these insights and customer relationships.

Outside the financial sector, China’s Tencent, a leader in gaming and social networking, has launched WeChat, a messaging platform that, among other features, can provide instant loans without collateral of up to $30,000. The service combines credit-bureau data from the People’s Bank of China with that gleaned from Tencent’s customer base of 800 million active users to analyze and respond to credit applications. Fintech services have become an integral component in the company’s ecosystem.

The development of ecosystems will differ broadly across markets for various reasons, such as consumer behavior and competitive landscape. In the United States, for example, they could be slower to develop because of market fragmentation, with strong companies already providing compelling solutions backed by advanced technologies. Greater consolidation and scale are likely needed to create conditions suitable for viable ecosystems. In emerging markets, however, digital ecosystems could advance more quickly as companies bypass intermediary technologies and go straight to the most advanced solutions. Platform players that are already deeply entrenched in the lives of consumers, like Tencent, could leverage their solid customer base to form the core needed for an ecosystem’s development.


Fintechs have matured rapidly in recent years, and the industry is entering a new phase of development. With no signs of the industry’s growth abating, its reach is likely to broaden quickly to embrace even newer technologies and offerings, blurring the boundaries now delineating financial services. As the momentum continues, some aspects of fintech are likely to reach into a broad swath of the global economy, much like how digital technologies have become a necessity, rather than an option, for every industry. Understanding the seven features that characterize this new era will allow companies to stake out the most valuable plots in the new landscape.

About the author(s)

Miklos Dietz is a senior partner in McKinsey’s Vancouver office; Vinayak HV is a partner in McKinsey’s Singapore office, where Gillian Lee is a consultant. The authors wish to thank Balazs Kenez, Miklos Radnai, Kausik Rajgopal, and Joydeep Sengupta