The fintech sector is assuming an increasingly central role in the strategy of the major Confidi network in Italy. In the last two years, more than 3 institutes out of 4 (77%) have in fact started at least two projects in the fintech field, while only 7.7% have not yet been activated.
Moreover, looking to the near future, only 15.4% of the companies in the Confidi network do not plan to start new projects in this area, while the remaining 84.6% expect to activate at least one. These are some of the data that emerged from a new survey carried out by Crif in collaboration with Prof. Lorenzo Gai of the University of Florence conducted on a representative sample of major Confidi companies, with a total stock of about $5.7 billion (€4.8 billion) of guarantees to domestic SMEs at December 31st, 2019.
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Focus on projects: which areas they focus on and to whom they are addressed
According to the study, the fintech projects of the major Confidi network companies concern the predominant business or directly related to it (guarantee management, consulting, direct credit and risk assessment). However, it is underlined that almost 20% of the activities are concentrated on new and highly innovative areas, such as crowdfunding, social lending, payment systems and minibonds.
With regard to the segments to which the projects are addressed, 78% is aimed at corporate clients, while 22% is dedicated to relations with banks. At a technological level, activities that aim to digitize the link with these segments through digital signature (28.2% of the total), cloud and API (both at 20.5%) prevail.
Business implications and strategies
From the point of view of expected profits, the analysis outlines a positive ratio between costs and revenues: more than 90% of the Confidi report project and implementation costs within $118,000 (€100,000) but about 70% have expected revenues higher than this amount. Moreover, according to the estimates of the Confidi, the combination between the start of new projects and the entry into operation of those in progress could lead to an increase in revenues of over 100 thousand euro per year for about 70% of the cases. From an organizational point of view, looking at the internal functions considered responsible for the design and implementation of projects related to fintech, the survey found a lack of unambiguous strategies within the Confidi. For 22.6% of the sample, the responsibility falls within the sphere of the company organization while for 18.9% the leading role is assumed directly by the General Management. This is followed by IT (17%), risk management and compliance (both with 13.2%). In addition, 78.6% of the projects involve third-party partners for consulting and IT activities.
Future challenges and forecasts
The uncertainty of the regulatory framework is indicated by the Confidi (in about 40% of cases) as one of the main obstacles to the full diffusion of fintech within the category. High implementation costs follow. In addition, there is less perceived risk of increased competition from non-financial operators (indicated by 20% of the total) and players in the same business sector (8%). Finally, 36% of the Confidi interviewed expect a further evolution in terms of expanding the customer and business segments involved by fintech in the future, also thanks to the introduction of new technologies.
“The results of this research confirm that also for the Confidi network , as for all financial operators, the path towards a new approach to the customer is now traced and that innovation and new technologies are destined to play an increasingly crucial role. Moreover, in a scenario in which investments in the development and implementation of Fintech solutions have exceeded $100 billion, it is normal that the Confidi network is also focused on new solutions able to concretely improve the processes towards their end customers as well as towards credit companies” commented Vito Antonio Furio, Director of Crif.
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First published in WE WEALTH, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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