Framework for assessing whether a fintech player has real chance of success

Hype tends to trump reality and the rules of business remain conฌstant, regardless of which young upstart seeks to challenge the established order. List out the successful Asian fintechs with revenues north of US$10m or those with successful exits and a heavy dose of humility quickly descends. Those of us in this industry have been looking at fintech for more than a decade and we remember the acquisition days of old (remember core banking vendors?) when regional companies did generate revenues and were sold for serious money. Today is not those days.
2. UUU. We at IDC Financial Insights have come up with a framework for assessing whether a fintech idea or proposition has a chance of succeeding – by assessing against the concepts of Ubiquity, Utility, and Usability (Triple U). This is an elegant framework also applicable to the markets in Asia/Pacific – where ubiquity is contextualised by varying levels of household income across at least 13 major markets, usability is uberrelaฌtive, and where regulations greatly impact utility.
3. Regulatorsaspromoters. Regulators and government agenฌcies are competing among themฌselves to be the most fintechfriendly jurisdiction. From picking fintech categories to promote, or putting together road maps for the nextgeneraฌtion of everyฌthing (payments, security, industry collaboration), and sandboxing, 2017 will be the regulator’s year to be a promoter of fintech. This will be a strong theme for Thailand, through Bank of Thailand and other agencies, this year too. Overall, this is progress from how regulatory agencies were seen as antichange and antiinnovation, although there is really only so much a regulator can do. A weak business model or the realities of painful KYC/AML/Compliance can quickly doom any startup to a short lifespan.
4. Disruption is not Intentional. Somebody has already said this, but fintechs do not intend to disrupt, they just happen to disrupt. Fintechs can have a healthy enough respect for traditional banks, and they just want to make banking or insurฌance, as they know it, better. Whether they succeed disintermeฌdiating traditional banks or insurฌers is not the point. In most cases, fintechs will work with banks and help them better service cusฌtomers. True disintermediation is more marketing than reality.
Financial services institutions too are realizing that fintechs are not necessarily enemies. Traditional, licencecarrying financial institutions can collabฌorate with startups to find new business models, or new modes of distribution, or other things. In some instances, we see banks allocating balance sheet money to invest in fintechs with the stated goal to support and interฌnalise innovation. Much of this is hype and there are real concerns about the ability of traditional banks to invest wisely. 
Bankers are not venture capiฌtalists and even promising techฌnologies can often run afoul of internal politics, tech fiefdoms and other barriers to adoption. Nevertheless, it is good to see banks trying to work with finฌtechs. Three big initiatives from Thai banks are worth tracking in this area.
Moving forward, we see that the fintech startup community is getting more active and maturing, while at the same time, the tradiฌtional financial technology vendors are remaking themselves to tap into the energy and excitement around “fintech”. These estabฌlished vendors are doing massive campaigns around APIs, or “asasservice”, or ideation and innovation workshops. Each has its own termiฌnology and marketing focus and this is also mirrored by the banks, which are quick to proclaim themฌselves as “innovators”.
How all these initiatives and activities take shape in 2017 will be exciting to watch. We’ll conฌtinue to keep our finger on the pulse, while keeping a cynical eye on the real measures of success beyond press releases, marketing events and hype.