On Monday, at a TechCrunch event in Shenzen, China, people and companies gathered to discuss AI, Applications, Developments, Fintech and more. During the event, one guest made an observation that may have come as a surprise.
James Lloyd, Fintech Lead at Ernst & Young, was of the opinion that Amazon is likely to become a dominant force in the fintech market. Following news that Amazon lent $1bn over the course of the last year, Lloyd believes that this is a natural progression for a company that has so much data and would benefit from providing financial services for customers. Whilst this would represent a shift in focus for the American e-commerce and cloud computing company, the reason for it seems to make sense.
With the potential for such a huge company – with vast resources and global reach - to move into what is the cutting edge of financial services, other sectors may question whether their industries could experience new competition from huge, multinational companies looking to capitalise on new developments.
Blurring the lines between markets or expanding capabilities is a natural progression for companies that dominate a sector as they look for further options to grow. Tesla, for example, made a move from the automotive industry to expand into energy storage and generation. Red Bull also now have a multi-media branch. It isn’t always established companies either. Airbnb grew from a home-rental start-up to offering flight bookings, and Uber expanded from a taxi service to offer food delivery.
It is perhaps not too hard to see areas with some relation to gambling looking to move into the sector. Media or sports companies may wish to cross-over to establish a foothold if the opportunity presents itself. If a start-up can enter a new market, an established company from another industry can do the same.
This capability is made easier with the development of new technology such as AI, blockchain, IoT etc. which provide new opportunities in many markets. If incumbents do not leverage the advantages, someone else will. With the wealth of data now available, opportunities are more readily spotted and quick ingress can be made by those who are prepared.
In order to avoid this competition, companies should adopt a position of constant awareness and evaluation of new technology to ensure that they realise the benefits first. Companies already established in a market have an advantage over start-ups or new entrants in their history, expertise and connections; however, new players may be less burdened with legacy technology or be nimble enough and brave enough to take advantage of new developments before the incumbents can get the ball rolling.
Digital Transformation and Roadmapping are becoming more and more important for those who wish to retain their place in the market and be competitive. As global giants and start-ups seek to enter new sectors, these processes should be embedded or a company realise the threat too late: Those who fail to prepare, prepare to fail.