Novelty v Innovation

[drllau]

Singapore has ear-marked FinTech as a future industry pillar so it is useful to review the distinction between something new as compared with disruptive. Technology always have a hard time competing against incumbent, entrenched approaches as can be seen by this proposal to replace private equity administration with a block-chain implementation. The point that this article makes is existing fund managers still prefer to operate according to the old fashioned paper based documents. Thus reimplementing it via a public ledger may reduce costs (captured partly by the service provider), at (unknown) cost of potentially exposing them to a new category of operational risks.  Whilst regulators may be pleased at greater transparency, that tends to be a social good, rather than private benefits and in the early days before network effects take over, there needs to be incentives for the early adopters (whether financial, or ego). Thus the degree of innovation in opening up new market, solving a difficult problem, or accelerating growth is lacking in this case. The promise of cryptocurrencies has always been about broadening access to capital, whether democratising access such as crowd-investing, exposing more eyes (bounty based rewards), or undermining monopolies (as in the case of international FX settlement). This has always been the point behind Lean Startup, the fact that an external change in technology may force a change in business models or create opportunity for disintermediation, whether open-source (democratising software development globally), 3D printing (disrupting the supply-chain) or universal computing on demand (Amazon cloud marginalising hardware brands). Singapore doesn't lack legal frameworks, angels or entrepreneurs, but what it needs more is imagination and guts to take more "risky" (as in blue-ocean) activities to move beyond the merely novel to the value-creation/exploitation stage of new technology.

As an exercise, one can count through the existing crop of startups in the various local FinTech incubators and ask whether it is crazy or conservative ... it would be interesting to look at the ratio.

Lawrence

http://www.linkedin.com/in/drllau