GlobalFintechSeries Interview with Dr. Daniel Diemers, Board Member at FiCAS
The fintech landscape over the next few years will be shaped more by large banks, neobanks and new fintechs offering a range of innovations believes Dr. Daniel Diemers, Board Member at FiCAS. In this Monday morning chat with GlobalFintechSeries, Dr. Daniel comments on the technologies that will drive innovations in fintech and shares a few thoughts on the future of the global fintech market. Here’s the complete conversation:
Can you tell us a little about yourself Daniel and your journey so far?
The best way to summarize my academic, entrepreneurial and professional experience so far is that my mind is very much focused on the future explores boundaries between technology, economy and society. I researched on digital impact and digitization in the 90s, then founded two startups, failed gloriously, went into the corporate world and since 2010 became an early mover into what we refer to as Fintech. Living in Zug, Switzerland at this time, I was exposed to cryptocurrencies and blockchain very early on and have worked in that field extensively over the past 5-6 years as a strategic advisor, but also as an angel investor and am delighted to be part of the ever growing crypto-community.
What are your top thoughts on the state of the global fintech market today? Over the next couple of years; which regions or fintechs will dominate the marketplace?
Well, we still have a long way to go. Back in 2011/2012 when the theme first surfaced on a broader scale, many banks saw it more as a distraction or side-show. Only a few people at the time embraced the true impact that fintech can have and were open to look at their core business model and how fintech could change it. Fast forward to today, the strict and tight regulation of financialservices, but also the complexity of some business models with financial services- think private banking, investment banking, large cap corporate banking, etc. – have prevented an all-out disruption in the field. Today we can only see strong fintech presence in retail banking and payments, and of course the emergence of cryptocurrencies, crypto finance and tokenization. Regionally, the US and Asia are faster to adopt, whereas in Europe I can feel a certain reluctance to go “all-in”, but I am hopeful that this will change soon. At least in crypto, Europe has held its ground so far and we have a lot of innovation happening here.
We’d love to especially hear your thoughts on the impact of Blockchain and AI on fintech innovations; and how are you seeing some of the newer fintech providers use AI to present game-changing features.
Blockchain and AI are an important part of fintech innovations as are AR/VR, cloud, and prospectively quantum computing. Basically, many exponential technologies will drive innovation in fintech,so it’s not “just” Neobanks, Roboadvisors and a few overlay offerings. AI, which you rightfully mention, has only very recently made big strides and advances after a period when expectations were much higher than what was possible in reality. I know this first hand, because in 1999/2000 I had my own AI-based startup and we tried hard, but failed. Today, much more is possible, and I feel we are just at the very early beginnings of seeing game-changing applications across Fintech. Therefore, I also think it’stoo early to single out certain fintech companies. AI is such a large field, there are many applications and use cases,so much more lies ahead of us in this field.
When it comes to cryptocurrency and other digital assets, how are you seeing the marketplace evolve? In what ways do businesses / regulatory bodies still need to adapt to optimize the potential of cryptocurrencies?
This is- also in the context of FiCAS – the area where I’m most bullish and have been for the past 2 years. There was a time when many people in the crypto-community felt that crypto would evolve as a kind of magic parallel universe, outside of established financial markets and be untouched by existing banks and regulators. To be frank, I was never backing that narrative. This is probably because I was both enthusiastic about crypto, but also had deep insights into how large banks and leading competent authorities, regulators and central banks think and operate.
As of today it has become clear that crypto is, in most parts, becoming well respected and highly innovative within financial services and many banks, wealth managers and regulators are embracing that view, not to mention most central banks, who suddenly, almost overnight jumped on CBDC/CBCC to make it the new-normal in central banking.
FiCAS, with the vision of its founder, Ali Mizani Oskui, who also shares a futurist mindset and likes to envision a world years ahead, has gone exactly down that path. If you followed cryptocurrencies over the past 6-8 years, volatility has always been a key feature. Classic “buy and hold” does not work well in such markets(unless you do a very early buy), but the less informed and educated investors typically get their timing wrong. This is where an actively managed, fully regulated, highly liquid and listed product makes a lot of sense in my view. So at FiCAS, we are actually helping adoption of crypto, both for institutional investors and well-informed retail investors.
Given the overview of whatfintech looks like today in 2020: how would you describe this market over the next decade?
I think it is going to go down (or up) like a typical exponential curve; we saw limited impact and successstories over the past 5-10 years, of course with a few exceptions, but the coming 5-10 years will be much more disruptive and dramatic. The curve issteepening. The largest financial services providersin the future may not be banks anymore. The smartest investment products may come from different providersthat are dominant today. Even regulation of markets will need a paradigm-shift, asregulating fintech touchesso many additional areasthan the classic prudential oversight mechanisms. The market will thus change dramatically and technology will be driving change much more, asit movesfrom being an efficiency enabler to becoming the innovation “petri dish” of entirely new business models.
In your view; what are some of the top global fintech / blockchain companies to watch out for over the next few years?
Well, definitely FiCAS for the product angle on crypto, and other crypto-ETP providers and hopefully soon ETF providers also. Then I foresee some of the leading crypto exchanges and brokers in a strong position to increase market share, they have learned to grow through bumpy cycles, and they can continue on the path to institutionalization going forward. On the Neobanking side we have already seen big players like NU Bank, Social Finance, Chime, Revolut or N26 enter the market. Their advantage is that they can scale much faster than most other, non-digital banks now. This gives them a superior edge and I predict marketshare of neo banks to increase.
Then there will be more M&A in the blockchain and crypto arena, as in cumbentstry to enter the fray and grow their capabilities and offerings both in fintech and crypto.
Last but not least I predict the further rise of “embedded” finance, for example Alipay or WeChat have built entire banking ecosystems on their platforms. This is the way forward and it will be interesting to see, for example, what David Marcus will present out of F2, the financial services arm of Facebook. In addition, offerings like Libra are extremely interesting, bringing fintech and blockchain very closely together. I firmly believe that the next few years will be very exciting for fintech and blockchain.
Before we wrap up, can you share 5 big takeaways for global businesses to help meet challenges ofthe new normal?
This is not an easy question to answer! From my vantage point, global businesses in financial services carry three legacies: firstly, the IT infrastructure, secondly, their culture and lastly, but not least, specific innovation and digital capabilities, that would enable them to move quicker within fintech and blockchain. Of course all three are interconnected and this is why we have seen limited success sstories at a global scale.
At the same time, you should never underestimate the innovative power of big, global businesses. Alipay and WeChat have left the startup stage long ago and they are still innovating. Blackrock has built an entirely scalable digital platform for investment products. Citibank has innovated an online deposit account opening back as far as the mid-90s.
Regulation is constantly playing catch-up and I sympathize with regulators who are trying to put some sensible regulation over an increasingly complex and tech-driven way of doing financial services. This is also why I’m very proud that FiCAS’ first product, the ETP, has been able to launch after a relatively short period of time on SIX Swiss Exchange, Switzerland’s largest exchange, and with the support of its partners such as InCore Bank and Flowtraders. This shows that it is possible to innovate fast and furiously and at the same time do this in a fully regulated manner, in collaboration with existing financial services partners.
FiCAS is a Swiss-based crypto investment management boutique. The firm devised the Bitcoin Capital Active ETP — the world’s first actively managed exchange traded product (ETP) featuring cryptocurrencies as underlying assets. FiCAS’ discretionary investment strategy is based on fundamental and technical analysis, proprietary algorithms and quant signals, and experienced analysts. FiCAS’ founder, Ali Mizani Oskui, has a proven track record of outperforming crypto market trends. The portfolio he managed from October 2015 to January 2018 achieved 110% outperformance against Bitcoin holding strategy returns during the same period, audited by a ‘Big Four’ consultancy firm. Founded in 2019, FiCAS is led by experienced portfolio managers and quant strategists, with expertise in both cryptofinance and traditional finance.
Dr. Daniel Diemers is an independent board member at FiCAS AG, the Swiss-based crypto investment management boutique. Previously, Daniel held the position of Financial Services Partner at PwC Strategy& (previously Booz & Co.). He also held the role of Managing Director Switzerland and was the PwC Head of Blockchain for Europe, Middle East, and Africa. Adding to his credentials, Daniel is a founding member of the Swiss Blockchain Federation (SBF) and Co-Founder of the Swiss Finance Technology Association (SFTA) and Crypto Valley Association (CVA). Daniel holds a Ph.D. in Economics from the University of St. Gallen HSG and a CEMS Master in International Management. Further studies brought him to Singularity University and MIT. He is a published author, frequent speaker at international conferences, and commentator of latest trends in exponential technologies, fintech, and crypto/ blockchain.