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Financial Technology (Fintech) is causing massive disruption in the wider financial sector. Previously dominant financial institutions are being directly challenged by a whole host of innovative financial technology providers. Fintech itself covers a whole range of areas such as Lending, Financial Payments, Insurance and Wealth Management. Globally, the total number of investments in this sector doubled from $50.8 billion in 2017 to $111.8 billion in 2018 (FT Partners Research, 2020).
One of the most prominent of these disruptive phenomena in the area of financial payments is that of ‘Challenger Banks’. These online ‘banks’ such as Revolut in the U.K, N26 in Germany and Alipay in China are experiencing exponential growth, tapping into consumers’ preference for mobile transactions and attracting a loyal consumer base.
Select 1 company of your own choice* within the Financial sector and complete the following tasks:
1. Drivers of Change There are many external drivers of change for financial providers today, particularly in the area of technology. Analyse 3 such external drivers for change for your chosen company as they seek to compete in the global, dynamic and fast-changing world of finance. Analyse and critically evaluate the impact that each of these drivers is having upon both the relevant industry sector and upon the selected company.
2. Competitive Environment For 1 of your company’s business units, conduct a competitive analysis utilising the five forces of competition analysis as outlined by Michael Porter. You must also classify whether the overall threat/power of these forces is low, medium or high, justifying your points.
3. Internal Analysis: Conduct each of the following tasks:
3.1 A Resource Audit, distinguishing between Basic and Distinctive Resources
3.2 An Analysis of Capabilities (Analyse a maximum of 5 capabilities distinguishing between Threshold and Distinctive Capabilities) Justify your answer by conducting a VRIO analysis for both Distinctive Resources and Distinctive Capabilities.
4. Conclusions and Recommendations Draw conclusions as to the key issues that you have analysed. Put forward key recommendations as to how your selected organisation should proceed in the future in terms of their strategic direction.