The benefits of technology applied to existing processes making them more efficient or effective should be very practical. However, it’s easy to get lost in over hyped terms such as ‘fintech’, ‘peer-to-peer markets’, ‘crowdfunding’ and forget what the practical benefit is.
In this post let’s open up a few scenarios and walk through them step by step, to examine the applications of new technology in existing operations value chains and delve into the practical implications and value at different stages. To set the context, let’s imagine a private market lender with interests in setting up a digitalization strategy for the longer term and position their bank as a leader in the modern financial services market. To achieve this, the lender plans to open a sector specific marketplace where they will originate and lead deals, and invite other institutions with an interest to maintain a regulatory compliant profile, gain access to deal room to diligence and follow deals, with the option to participate in the syndication of these deals as a co-investor. Ultimately bring down the cost of capital, increase distribution and elevate the lenders corporate profile.
Opening Access for Capital Deployers
First and foremost, this creates new access for an institutional group that may not have been privy to deals of this type earlier (geography, niche, term etc) due to logistical factors such as administrative cost, proximity or lack of partners. Roadshows for investors may now be complemented by the digital platform, which will keep the institutional audience appraised of new deals, developments even investor tools and education on the sector, lowering the cost of information distribution and giving a cost efficient model for including more institutions in deals. Face to face time is still vastly important, but now you can conduct those conversations with already informed clients and partners, and focus on actionable meetings rather than disseminating information. One of our client has summarized the value of having a digital platform as simply as: “Before our digital platform, we were working with 25 investor groups. Now we are able to work with over 300 investor groups. We couldn’t do that without a scalable platform.”
Decreased Cost of Syndication and Deal Making
Syndication efforts are costly, endless roadshows and investor briefings, especially if dealing with investors in different locations or cross border transactions, together with all needed follow up can take months to close. Complementing these efforts with source of information and deal room tools, the discussion can benefit from robust information making the in person discussions much more productive. Instead of fielding calls of potential information, what if the interested party would already have the information needed to make an educated investment decisions at their disposal before entering the discussion?
Distribution Unlocks New Avenues for Growth
Disseminating information through an online platform in an efficient manner also leads the option to open the platform to further stakeholders and expand operations into different institutional partners and even deal segments. By lowering the cost of deal making and opening new avenues for access, the platform could yield interest from new institutions and be able to accept deals of a different nature than before due to an updated cost structure.
Originally published at news.crowdvalley.com. You can read the full story here: http://news.crowdvalley.com/news/fancy-fintech-or-pragmatic-operational-efficiency
