Can SAP Fioneer beat 3-1-0 Ant Financial Growth Strategy?

Ant Financials, the most valuable fintech unicorn created ripples in the world wide financial markets and created a history of disruption in the FinTech world. Ant Financials expanded very fast by partnering with Chinese Banks and Institutions, biometric payments, fuel filling stations, whole sale  and retail market partners, grocery shops, purchase of train tickets, insurance and investments in the app, opportunities for loans to consumers and small business.

With behaviour based financial incentive models, Ant Financials has grown exponentially in last few years worldwide.  Ant financials first started as a bank and then quickly developed it is own banking systems as container based micro services and the commercialized the offering to other business partners.

There is one thing that is a key differentiating factor with Ant Financials, their simple platform based 3-1-0 strategy than a number crunching strategy that corporates generally use to grow the business.

“It takes three minutes to apply for a loan; one second to transfer the funds; and there is zero manual intervention in the whole process”

It reminds me of Indra Nooyi’s Quote “It is not performance and/or purpose but it is performance with purpose , connect what is good to business with what is good to economy and people”.

Jack Ma exactly did that with his 3 principles :

  • Make everyone financially inclusive and provide equal opportunities to everyone and kill the origins of feudalism
  • If you are only rich person in the village, then whole village gets jealous and will like to bring you down. If you instead provide a platform for everyone in village to earn then you will be creating history in the world
  • It is not “Made in China” or “Made in Europe” or “Made in China”, it is “Made in Internet”. Creditworthiness is not a privilege for only few people , but it should be accessible to everyone on the internet for providing a great future for all children across the world.

Jack Ma has the first principle based design thinking from the beginning and he visualized end to end consumer experiences where he connected retail and wholesale commerce, financial markets, social channels, digital and entertainment media consumers in a single platform rather than trying to fit his software to old branch based banking processes.

Jack ma combined this platform approach in everything from payments and lending to insurance and investing with its linear microlending and micro-investing. This hybrid approach combines complimentary platform and linear services to create a financial services ecosystem of unparalleled breadth.

Now we will see how SAP fares in this equation with their product portfolio and the gaps.

According to this blog, The new solutions under SAP Fioneer will cover the full cycle of banking and insurance operations processes and help meet regulatory requirements They will be based on integrated data and provide an opportunity to move FSI processes to the SAP Business Technology Platform in the cloud.

SAP Fioneer spin off is one of the intelligent moves by SAP but however there is fundamental difference on what the firm want to do compared to Ant Financials ” While Ant Financials is looking to redefine the financial and regulatory markets in future using container and API based real time micro service software packages based on future consumer behaviours to benefit everyone in the world using first principles based design thinking, SAP seemed to looking to fit the product to help banks and insurance providers to meet regulatory markets and legacy processes that are in existence for decades which may fit or not fit be purpose for future trading requirements by next generation consumers!”

Example : I wouldn’t need a complex SAP S/4 HANA  FPSL reconciliation distributed ledger and legacy contract based processing if I am going to use smart contracts and blockchain where trade happens real time and data storage is scaled on demand in future. “Would banks really exist in future, I may be dreaming but it looks like a reality based on current technology advancements?”.

Why replicate current data models in SAP S/4 FPSL/FSDM that are used by banks and build a product that fits current processes? Instead, let’s SAP Fioneer create data models and service offerings that helps bank to transact with a customer like never before and help banks to redefine and simplify their current KYC, Credit Monitoring , regulatory, anti-money laundering and Insurance Processes and amplify customer experiences? Why should we use digital form for KYC when we can check customer creditworthiness by integrating into different social channels? Doesn’t Facebook or snapchat have more customer information than banks?

SAP product portfolio below is as comprehensive as Alibaba , but the key difference is “Data is moved between different platforms seamlessly using real time API’s and container based microservice based software components and licensing is based on microservice software apps that are centred around futuristic trading principles of consumers and corporates rather than legacy trading principles of consumers and corporates “.

While SAP API Hub is fantastic and provides lot of pre-packaged integrations to connect various SAP products in different industries, it is still a bit complex, time consuming to integrate all platforms as some of these products are built as monolithic architectures(not microservices) using legacy trading processes that existed for many centuries.

While SAP S/4 HANA Essentials have micro service based best practice scope item license offerings, however the commercial model is not replicated to all SAP products even with “Rise with SAP” and hence adoption by enterprises is limited as they are constrained on licensing due to costs.

Jack Ma apparently went missing for few months as he challenged regulators with his statement “pawn-shop mentality”. He had also claimed that the authorities were trying to “use the way to manage a railway station to manage an airport” when it came to regulating the new world of digital finance. 

As much as regulators are risk averse to change with respect to all these new technologies, it is impossible to stop the growth of internet and future is definitely going to be machine or AI based regulation and it is inevitable to change regulatory laws in future for connected digital world.

SAP shouldn’t fit their product to current regulatory processes but instead help corporates to simplify the regulatory processes and help banks and consumers to build futuristic machine and AI based regulatory processes to attract consumers that it is in line with future trading principles and bring agility in the entire regulatory ecosystem by leveraging SAP BTP and Intelligent Technologies.

If SAP Fioneer wants to penetrate into FSI market via Dediq like Ant Financials then SAP needs to relook at licensing model and banking processes from future consumer point of view and use first principle FUTURE PROCESS based  design thinking in product development by leveraging SAP BTP and Intelligent technologies i.e. “Build Microservice products for Consumers that will help banks to attract and retain new and old consumers and build new regulatory microservices to amplify the impact on consumers rather than fitting the products to current or old trading processes and helping the banks to comply with paper based regulatory requirements that are designed centuries ago by our great grand fathers”.

Please note the views expressed here are mine and not the views of my organization. I am very interested to hear thoughts from SAP community across the world.

If you are passionate about Fintech, I suggest all fellow SAP readers to read this amazing book! I am really enjoying reading this book!