WHY IT MATTERS: Digital Transformation

In Santiment’s end-of-year digest, we look back at some of 2021’s most important market trends and what they tell us about the year ahead - all from the prism of on-chain, social and development activity.

Based on a survey of 3,000 senior executives around the globe, the 2021 AlixPartners Disruption Index confirms that cycles of disruption, which displace existing businesses, markets, and value networks in favor of newer ecosystems and relationships, have emerged as the central strategic challenge for business leaders today.

Cumberland Farms is a prime example of this approach. Drivers who fill up at one of the privately held chain’s gas stations can save 10 cents a gallon if they sign up for its SmartPay app, which connects directly to their bank account and is much like paying utility bills or rent. The company says its users have saved more than $100 million by using the SmartPay app.

Since 2009, Bank of America (BofA) has closed 1,597 branches in 253 counties across the US, selling the spaces to local banks in some areas and directing customers to further branches in others, according to The Wall Street Journal. For context, that's equivalent to 26% of the branches that the bank currently operates, and represents a big cut that's reflective of a rising industry trend.

McKinsey’s summary of leading FinTech articles is a fantastic summary of the issues facing global financial services players.  There are several sections in this 80-pager that we believe our clients will find the most value….

• Cutting through the noise (page 6) – this is a noisy space with many old and new entrants laying claim to a place in FinTech land.  This section of the report truly cuts through the noise and presents a very clear view of the primary value drivers for F/S players and love the “6 Digital Imperatives” chart on page 12. 
• Helping Incumbents not Disrupting (page 24) – the notion of cooperation vs. competition between FinTechs and Incumbents has emerged as a more realistic future for the industry.  Canada has a unique F/S model with large, dominant and highly successful incumbents controlling the vast majority of clients and assets.  We see cooperation as being the only role that we will play as a FinTech provider and this seems to be an increasingly popular position in our industry.
• Banking on the Cloud (page 49) – the movement from resistance to acceptance and now to adoption of cloud apps is accelerating.  In our business, revenues generated from Cloud services have increased from 10% to 50% in just 3 years and the discussions that we have had with clients around “resistance” to the Cloud have virtually disappeared.  Innovation at a higher pace and lower cost is becoming table stakes and embracing this technology is now an afterthought.

ARK Invest aims to identify large-scale investment opportunities resulting from technological change. We believe innovation is key to growth. From a broad spectrum of disruptive innovations, Big Ideas represents our annual breakout of technologies that we believe will accelerate significantly in the months ahead.

Starbucks customers in the U.S. and Canada are splashing less cash at the coffee chain than ever before. That doesn't mean that they are buying fewer beverages and snacks. Rather, they are embracing the company's loyalty card (which can be loaded with money) and app. The company has 12 million loyalty members in the U.S. alone and that means that Starbucks boasts a serious amount of cash on its customer cards. Wall Street Journal data featured in Market Watch shows that Starbucks has more customer cash than many banks have in deposits.

Before long, splashing the cash at your local Starbucks might become a thing of the past. 41 percent of the coffee chain’s customers in the U.S. and Canada now pay for their beverages and snacks after loading money onto their Starbuck’s card. With 12 million loyalty members in the U.S. alone, the coffee chain boasts more customer money on its cards than many banks have in deposits.

According to Wall Street Journal data featured in Market Watch, Starbuck’s customers in the U.S. have loaded at least $1.2 billion onto the company’s cards and app. That’s higher than the deposits held by Customers Bank ($780m) and the Green Dot Corporation ($560m). Starbucks still has a long way to go to catch Paypal which boasts a whopping $13 billion on its customer accounts across the world.