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The Future of Diabetes Care Key Innovations in the Continuous Glucose Monitoring by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

The Future of Diabetes Care: Key Innovations in the Continuous Glucose Monitoring

Continuous glucose monitors (CGM) represent a disruptive innovation that has transformed the diabetes management landscape. In recent years, the CGM market has seen remarkable growth, becoming an integral part of diabetes care with the potential to supplement or even replace traditional blood glucose monitoring methods. Opportunities in the CGM sector are endless, as the market remains under-penetrated. Market leaders such as Dexcom and Abbott leverage this potential to establish their foothold while continuously innovating their offerings.

CGMs provide accurate readings that can be used for insulin dosing decisions, eliminating the need for traditional fingerstick tests. The devices offer high ease of use and convenience, with many integrating seamlessly with smart devices. Additionally, the increasing use of AI and machine learning has led to the development of algorithms that customize health-related data for users.

Read our related Perspective:
Continuous Glucose Monitoring Devices: Overcoming Barriers in LMICs 

As we expect the next generation of CGMs, revolutionary advancements promise to transform diabetes management with these devices. The ongoing innovations aim to enhance precision and accuracy, offer predictive analytics, provide continuous monitoring beyond glucose, and enable the integration of other health parameters into the CGMs.

Precision and accuracy

Building on the success of current CGMs, the next-generation devices are likely to offer unprecedented precision and accuracy. Upcoming CGMs will use next-generation sensor technologies, including advanced nanomaterials and multi-enzymatic systems, to detect glucose levels with higher sensitivity and specificity.

Sophisticated AI and machine learning will support the prediction of glucose trends and real-time data processing to increase accuracy. To further improve accuracy across diverse populations and glucose ranges, emerging CGMs will leverage personalized calibration algorithms that adapt to individual metabolic variations.

Integration with broader health ecosystems and cloud-based analytics will be industry players’ key focus, ensuring improvement through real-world data feedback. Clinical validation and regulatory supervision will ascertain that CGMs adhere to all safety and health standards.

Overall, players will aim to provide reliable glucose data to empower users with actionable insights for effective diabetes management. Leading industry players, such as Abbott and Dexcom, prioritize data accuracy and ensure that their devices track glucose trends accurately with minimal error. For instance, Abbott’s Freestyle Libre uses advanced sensor technology to maintain accurate glucose readings over a 14-day wear period. On the other hand, Dexcom’s G7 utilizes advanced algorithms to continuously calibrate and refine glucose readings based on real-time data and historical trends, eliminating the need for fingerstick calibrations. Both devices provide real-time alerts on glucose levels to help users take action.

The Future of Diabetes Care Key Innovations in the Continuous Glucose Monitoring Market by EOS Intelligence

The Future of Diabetes Care Key Innovations in the Continuous Glucose Monitoring Market by EOS Intelligence

Integration with smart devices

Anticipated advancements include seamless connection with smartphones, smartwatches, and other wearable devices for uninterrupted glucose monitoring. Such integration will not only elevate user experience but also allow real-time updates, such as alerts for glucose fluctuations, viewing historical trends, and sharing data with healthcare providers, thus facilitating proactive management of user’s condition.

In advanced CGMs linked with mobile applications, predictive algorithms will be able to foresee glucose levels, offering tailored suggestions and insights based on individual patterns. Recently, in June 2024, Dexcom enabled a direct-to-watch feature, allowing its G7 users to monitor real-time blood sugar data from an Apple watch, regardless of whether they are carrying their phone.

In the future, this synergy between CGMs and smart devices will not only improve the accuracy and accessibility of glucose monitoring but also empower users to make quick, informed decisions regarding their health and improve overall well-being.

Predictive analytics

The real-time and historical analysis of glucose data equips CGMs to predict blood glucose levels several hours ahead, notifying users about impending hypoglycemia or hyperglycemia before they occur. This proactive approach allows for timely interventions, such as regulating insulin dosage or dietary modifications to maintain optimal glucose level.

Predictive analytics integrated with CGMs is revolutionizing the diabetes care market, and key market players are increasingly prioritizing its incorporation into their devices to gain a competitive edge. Roche is gearing up to compete with Abbott and Dexcom with its Accu-Chek Smartguide, which will soon be launched in the European market following its approval in July 2024. The company is betting on robust predictive analytics to differentiate its product from competitors. The device aims to enhance glucose monitoring by employing predictive AI to forecast glucose levels up to two hours ahead, identify the risk of low blood glucose within 30 minutes, and detect nocturnal hypoglycemia.

Over the years, as predictive algorithms improve, CGMs will become increasingly suitable for mitigating risks, reducing glucose spikes in patients, and equipping patients to manage diabetes better and improve quality of life. In the future, enhanced personalization and seamless integration of CGMs with broader health ecosystems can transform diabetes management by providing more precise and accessible real-time insights and recommendations tailored to individual metabolic responses, lifestyle patterns, and environmental influences. It is likely that the next generation of CGMs will also predict and adapt to potential disruptions caused by stress, illness, or diet changes.

Product diversification

The evolution of CGMs is expected to go beyond glucose monitoring, embracing a holistic approach focused on personalized and preventive healthcare. Companies are conducting research to integrate CGM readings with health metrics such as ketone levels, hydration status, and early indicators of other health conditions.

Industry players are also developing targeted solutions for various customer segments. For instance, they are focusing on pediatric and geriatric populations by creating CGMs customized to meet these segments’ unique physiological and lifestyle needs. Another area of focus is developing CGMs to support gestational diabetes, helping pregnant women better manage maternal and fetal health.

Currently, companies such as Medtronic and Abbott have partnered to integrate Medtronic’s automated insulin delivery systems with Abbott’s CGM to create closed-loop systems. This system automatically adjusts insulin delivery based on real-time glucose readings, which helps patients improve glycemic index.

EOS Perspective

The next generation of CGMs is poised to help manage of chronic diseases beyond diabetes. With key players such as Dexcom and Abbott maneuvering the industry, the future promises unprecedented advancements through the fusion of technology and healthcare. The impact on patient outcomes and the broader healthcare landscape will lead to a more personalized, proactive, and interconnected approach to care.

There is a significant opportunity for industry players across major markets such as the USA, where CGM adoption remains low, with about 90% of people with diabetes still not using these devices. To penetrate key markets including the USA and Europe, CGM companies need to develop effective go-to-market strategies to increase adoption rates. They should focus on patient segmentation, exploring multiple distribution channels, and forming alliances with key stakeholders.

Patient segmentation

Sales strategy and product offerings could be tailored around specific patient groups, i.e., Type 1 versus Type 2 diabetes or various income levels. For example, Abbott has strategically developed different CGMs to target varied patient groups. Its FreeStyle Libre is designed for users with Type 2 diabetes, while Lingo, a consumer wearable, is ideal for consumers trying to improve overall health and well-being.

Diversifying distribution channels

The CGM players must diversify their distribution channels, particularly by utilizing digital marketing and social media to reach a broader audience and increase awareness. Digital marketing can also serve as a crucial tool for connecting with diabetes online communities and educating patients.

Abbott and Dexcom are looking to explore new distribution avenues. In H2 2024, both companies rolled out their competing products (Abbott’s Lingo and Dexcom’s Stelo) over-the-counter in the USA, selling through their websites, with an aim to expand the reach and enhance market penetration. Expanding sales through the online channel also makes it simpler for consumers to purchase CGMs directly from producers simpler for consumers.

Partnerships

Forging strong alliances with key stakeholders can create improved and integrated diabetes management systems. Strategic partnerships with technology companies can help CGM players enhance products, expand market reach, and improve patient outcomes. On the other hand, partnering with insulin pump and insulin pen companies can streamline diabetes care by combining real-time glucose monitoring with automated insulin delivery.

Both Abbott and Dexcom have partnered with Tandem Diabetes Care to integrate FreeStyle Libre CGM and G6 CGM, respectively, with Tandem insulin pumps. These systems use real-time glucose readings to automatically adjust insulin dosing, improving diabetes management.

The opportunities in the CGM market are vast and continually expanding. As technology advances, CGMs will become more accurate, user-friendly, and integrated with other health management tools. Moreover, with the growing prevalence of diabetes worldwide, the demand for efficient and effective glucose monitoring solutions will only grow in the future, making the CGM market an attractive segment for continued investment and development.

NVIDIA's Meteoric Rise Can the AI Chip Giant Sustain Its Dominance by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

NVIDIA’s Meteoric Rise: Can the AI Chip Giant Sustain Its Dominance?

NVIDIA has grown exponentially in recent years. The company made significant strides as an early entrant into the AI chip market, becoming the sector’s leading company. In July 2024, NVIDIA’s market cap was US$2.9 trillion, registering 137.1% growth over 2023, making it the world’s third most valuable company behind Microsoft and Apple. As AI development continues its upward trajectory, big tech companies are focusing on developing their AI capabilities more than ever, posing a threat to NVIDIA’s dominance in the AI chip market.

Over the past decade, NVIDIA has evolved from a gaming GPUs maker to a leader in AI and data centers. The company’s early venture into the computing space coupled with continuous development of its cutting-edge technology helped the company solidify its position as the pioneer in the fast-growing AI training and inference market.

According to Mizuho Securities, a Japanese investment and securities firm, NVIDIA holds 70-95% of the advanced AI chip market share in 2024. Despite being the leading firm and major shareholder in the booming AI chip market, NVIDIA started to face rising competition and regulatory scrutiny that challenge its dominance.

Regulatory scrutiny poses a threat to NVIDIA’s market strategy and dominance

NVIDIA’s dominance has caught the attention of regulators worldwide, with antitrust investigations underway in the USA, EU, and China.

The acquisition of ARM, a UK-based semiconductor company, was scrutinized by regulators in multiple countries and was terminated in 2022. This was due to competition and control of key technology. Qualcomm, Google, and Microsoft opposed the deal because of concerns over fair access to ARM’s technology and fair industry practices.

This increased scrutiny may limit NVIDIA’s ability to offer products and services and impact its strategic expansion plans and market dominance.

NVIDIA's Meteoric Rise Can the AI Chip Giant Sustain Its Dominance by EOS Intelligence

NVIDIA’s Meteoric Rise Can the AI Chip Giant Sustain Its Dominance by EOS Intelligence

Competitors are increasingly vying for NVIDIA’s AI chip market share

The global AI chip revenue is projected to reach US$33.4 billion in 2024, per the Gartner market report, making it a lucrative space to operate in. Major tech companies are investing in AI chip development to compete and break NVIDIA’s monopoly in the market.

Through partnerships, innovation, integrated solutions, and niche offerings, competitors are shaping a competitive landscape that will continue to democratize and push AI tech forward. As the AI computing industry will see unprecedented growth, NVIDIA’s competitors are positioning themselves to capitalize on the emerging opportunities.

Tech companies are investing heavily in their AI chip development capabilities

The generative AI boom has exposed how much the big tech companies depend on NVIDIA. NVIDIA’s biggest customers (Microsoft, Google, Amazon, and Meta Platform), which account for over 40% of its revenue, are building their own AI chips to reduce their dependency on NVIDIA.

Amazon, through AWS, offers its own AI chips, Inferentia and Tranium, as cost-effective alternatives to NVIDIA’s chips. Google has been using its tensor processing units (TPUs) since 2015 and recently announced its Trillium chip. Microsoft is building its own AI accelerators, Maia and Cobalt, and Meta is building its own AI chips for more efficiency.

Among all competitors, Intel is likely to emerge as a core competitor to NVIDIA in the AI chip market, leveraging its experience in making CPUs and GPUs. Intel is challenging the company’s dominance in the AI processor market with the Gaudi accelerator AI chip, which costs one-third of NVIDIA’s GPUs.

Intel is focusing on edge devices, such as smartphones, that utilize smaller language models (LLMs) as part of its “AI everywhere” strategy.

NVIDIA is dominating the fast-growing cloud data center market. Intel’s approach of not replicating NVIDIA’s business model but leveraging its broader technology portfolio is likely to provide it with a competitive edge and a chance to compete with NVIDIA.

AI processing shift to edge devices challenges NVIDIA’s market share

Another challenge for the company is the shift in AI processing from data centers to edge devices such as laptops, PCs, and phones.

Large companies, including Apple and Qualcomm, are updating their chips to run AI models on these devices with neural processors for privacy and speed. Apple’s latest devices are AI optimized, and Qualcomm’s new PC chip allows laptops to run Microsoft AI services on-device.

For NVIDIA, adapting to this new paradigm will be important in the long run. As edge AI grows in demand, the company must innovate and compete in this fast-changing market to remain ahead of the competitors.

Investor-backed startups are making strides in the AI chip market

Many new entrants and growing companies are also competing in the AI chip market with innovative approaches and niche solutions.

Startups, such as Graphcore, Cerebras Systems, Groq, and SambaNova Systems, are building specialized AI architectures to outperform traditional GPUs in specific AI tasks. These startups are backed by strong venture capital and strategic partnerships, providing them with resources to enhance their R&D capabilities and scale much faster. For instance, Grog, a startup in the AI inference market, secured US$640 million and claims to have developed an AI chip faster than NVIDIA’s at a much lower price.

The surge in capital investment is likely to support startups in developing new AI chip solutions and carve out a niche for customized AI workloads. This way, startups can tap into new customers seeking customized chips for specific solutions.

Amidst the competition, NVIDIA is expected to leverage its early head start in the AI chip business and will likely focus on its core strength of developing advanced chips.

Nvidia’s strategic investment in startups strengthens its robust ecosystem

NVIDIA has created an ecosystem that makes it hard for competitors and customers to switch away. Key components of this ecosystem include strategic investments in startups, software bundling, and partnerships, creating a robust and interconnected web.

NVIDIA’s venture capital arm, NVentures, plays a crucial role in product innovation by investing in startups across various industries.

In addition to financial support, NVIDIA also offers these startups access to its technology and expertise to foster innovation and accelerate product development. For example, NVIDIA Inception, a global program, supports startups by providing technology and marketing support, connecting them with venture capitalists, and giving them access to the latest technical and financial resources.

Investing in promising startups provides NVIDIA with early access to emerging technologies and potential market disruptors. This enables the company to integrate the next big technologies into its products or develop new products that keep it ahead of the competition. It fuels innovation and creates a network of companies that dependent on NVIDIA’s technology, making it hard for them to switch to competitors.

NVIDIA’s seamless hardware-software integration provides a competitive edge

Software bundling is another way NVIDIA strengthens its ecosystem. The company often bundles its hardware with proprietary software, making its products better and more functional. This software is frequently optimized for NVIDIA’s hardware, so customers cannot switch to competitors without losing access to this software. The strategy of bundling often leads to better performance and value for customers, making NVIDIA’s products more attractive.

NVIDIA’s software ecosystem, particularly CUDA (Compute Unified Device Architecture), plays a vital role in its dominance. CUDA only works with NVIDIA’s chips, and over 3 million developers use it to do AI experiments and develop applications. NVIDIA also updates its software annually with new AI chip architectures and software. The company’s continuous innovation ensures its hardware and software are always in sync, so customers stay within the NVIDIA ecosystem.

NVIDIA’s strategic partnerships enable tech integration across sectors

NVIDIA has partnered with companies ranging from tech giants to startups and helps them develop and optimize their software for their hardware. This has created a network of companies across various industries whose products and services are deeply tied to NVIDIA’s technologies.

NVIDIA’s strategy to form partnerships and integrate them into its network of systems and software is beneficial to both parties. Switching to other competitors would incur significant costs and disruptions for customers. NVIDIA’s industry-wide partnerships help it have a strong and integrated ecosystem. For example, partnerships with AWS, Microsoft Azure, and Google Cloud allow NVIDIA to integrate GPUs into the cloud and make their technology available to all enterprises and developers.

In the automotive space, partnerships with Tesla and Mercedes-Benz put NVIDIA’s AI and GPU into autonomous driving, making them rely on NVIDIA AI solutions. Further, partnerships with large enterprises, such as IBM and VMware, to optimize hardware and software make NVIDIA the preferred partner for advanced computing in data centers and AI applications.

NVIDIA’s dominance may lead to increased costs of manufacturing AI chips

NVIDIA’s dominance is likely to significantly impact the world’s largest contract chip maker, TSMC (Taiwan Semiconductor Manufacturing Company), and the entire semiconductor industry.

NVIDIA is TSMC’s key customer, and the latter dedicates a big part of its production capacity to NVIDIA. NVIDIA’s pricing power impacts TSMC’s margins, and if NVIDIA decides to squeeze its suppliers to maintain its margins, TSMC is likely to feel the heat on its profitability. This could lead to capacity constraints for other customers, which will delay their product launches and drive up the prices of AI chips.

An increasing demand for AI chips from NVIDIA and others will drive up the cost of raw materials and components. This cost increase may trickle down the supply chain to end consumers. NVIDIA’s dependence on TSMC makes the supply chain vulnerable to disruptions due to China’s multi-pronged pressure on Taiwan.
NVIDIA’s dominance could drive consolidation in the semiconductor industry

NVIDIA and other companies may diversify their supply chain to mitigate the risks associated with geopolitics, supply, demand, and prices. This could lead to partnering with multiple foundries and geographic diversification. Some semiconductor companies may go for vertical integration to have more control over the value chain.

NVIDIA’s dominance and financial muscle may lead to consolidation in the semiconductor industry. Companies lacking financial resources may find it challenging to compete with big tech companies and could potentially get acquired by larger AI chip manufacturing companies.

Companies in the automotive and electronics sectors that rely on semiconductors may face procurement challenges due to supply shortages. This may lead to prioritizing high-margin products and potentially disrupting the availability of lower-margin products.

EOS Perspective

Only a limited number of global players operate in the AI chip manufacturing space, with NVIDIA holding the majority share. Startups and big tech companies are building strategies to carve out their market share.

NVIDIA will likely hold on to its market leadership with a slight dip in market share to core competitors, such as Intel and AMD, in the next few years. However, with its investments in AI R&R and its initiatives to diversify into different segments, NVIDIA might have a chance to recapture lost market share and grab new growth opportunities in the long term.

As the competition in the AI chip market intensifies, we can expect the launch of more affordable AI chips from NVIDIA competitors designed for customized AI applications. NVIDIA, on the other hand, would prioritize performance and reduce the cost of its AI chips. Since the competitors still lag in designing and developing advanced AI chips and often depend on third parties, NVIDIA is likely to capitalize and dominate the high-performance AI chip space.

With the massive and growing AI market, there is plenty of room for competitors and startups to grow even with a small market share. However, regulatory delays, sustainability issues, and unethical AI use can block strategic initiatives, increase the cost of compliance, and create uncertainty for investors and partners. Navigating these challenges will make NVIDIA more resilient and agile. The increased transparency and compliance can open up new partnership opportunities and new markets in regions where compliance is a major concern.

As AI will be the source of value for many businesses, NVIDIA will use its position to diversify by tapping into new markets to reduce its dependence on traditional markets. A potential partnership the company is discussing with OpenAI, a US-based AI research organization, will likely create a pool of new commercial opportunities for both companies to explore and monetize AI-driven solutions in the healthcare, finance, and automotive sectors.

 

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs?

The emergence of Central Bank Digital Currencies (CBDCs) has become a central focus in the global financial space, as it offers the potential for revolutionary shifts in how the world conducts and manages monetary transactions. While much of the spotlight has been on retail CBDCs, wholesale CBDCs are gaining momentum globally. Asia is leading the pack in developing wholesale CBDCs that offer opportunities that may significantly impact the global financial landscape.

Asia is outpacing developed countries in the drive toward wholesale CBDCs

Wholesale CBDCs are digital forms of a country’s fiat currency. Unlike retail CBDCs, only a limited number of entities can access wholesale CBDCs, which are designed for undertaking interbank transactions and settlements. The concept of wholesale CBDCs is similar to currently available digital assets used for the settlement of interbank transactions, with the key differentiation being the use of technologies such as distributed ledger technology (DLT) and tokenization.

Wholesale CBDCs have garnered global interest with central banks. Facebook’s (albeit failed) attempt to launch its Libra cryptocurrency in 2019 was a breaking point for blockchain technology’s use in global finance, eventually spurring the development of wholesale CBDCs. Initially launched as a measure to counter private cryptocurrencies, wholesale CBDCs are fast emerging as a potential disruptor in the fintech space.

Currently, more than 30 countries are researching the use of wholesale CBDCs. Interestingly, about half of these countries are from Asia. The development of wholesale CBDCs in Asian countries has outpaced the efforts of financially strong economies such as the USA and the UK, as these CBDCs offer more tangible benefits to developing economies in Asia than their more developed counterparts.

Several Asian countries have engaged in pilot programs, and proof-of-concept runs to explore the use of wholesale CBDCs to improve the efficiency of domestic large-value transactions and cross-border transfers.

China has been at the forefront of the development and widespread testing of wholesale CBDCs. Several Southeast Asia and the Middle East countries, including India, the UAE, Thailand, and Singapore, have launched pilot programs to explore the viability of wholesale CBDCs and test interoperability for cross-border transactions.

Achieving faster and cheaper cross-border transactions is key to Asian central banks

Growth in global trade has resulted in exponential growth in cross-border transaction volumes. However, these cross-border transactions are faced with challenges. There may be involvement of potential intermediaries, varying time zones, and regulatory frictions that may cause slower settlement. Financial systems such as SWIFT have a stranglehold on the cross-border transaction ecosystem, with many of these transactions using SWIFT messaging to settle payments.

Potential intermediary fees and forex-related charges also lead to increased transaction costs. According to World Bank’s estimates, transaction costs for cross-border transactions may range up to 6% of the transfer value, a significant surcharge.

Removing friction associated with cross-border transactions is a key goal behind Asian countries’ push toward exploring wholesale CBDCs.

A growing interest in wholesale CBDCs is attracting investments in building large-value payment infrastructures in Asia, allowing for faster and more efficient cross-border transfers. Wholesale CBDCs enable central banks to transact directly with each other, removing the involvement of multiple intermediaries and resulting in quicker transaction settlement. This also results in the elimination of intermediary fees to help lower transaction costs.

Technology also adds elements of security and traceability to these digital transactions. It also offers the potential to program them by automating or restricting payments if certain conditions are met.

Challenging US dollar dominance in cross-border settlements offers additional motivation

Several Asian countries are also looking to reduce their reliance on financial settlement systems that involve US dollar reserves. Currently, most cross-border transactions involve the use of the US dollar. Countries with limited forex reserves also face the challenge of outgoing reserves, resulting in potential currency inflation and adding to the already high transaction costs.

Wholesale CBDCs offer several Asian countries, particularly those with limited US dollar reserves, an opportunity to directly transfer the amount in their local digital currencies and eliminate the need for US dollars in bilateral transactions.

Developing Asian economies, such as China and India, with significant cross-border transactions, are looking to promote their CBDCs as a potential reserve currency in the Asian region that would allow cross-border settlement directly in the digital currency. It is also in the interests of countries such as China to develop its CBDC (e-CNY) as a potential alternative to the US Dollar in cross-border trade to mitigate any potential currency-related challenges posed by economic sanctions from the USA and EU.

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs by EOS Intelligence

What’s Fueling Asia’s Drive to Develop Wholesale CBDCs by EOS Intelligence

Tandem development and collaborations offer tailwinds to CBDC projects in Asia

Central banks of several Asian countries are undertaking information sharing and tandem development of CBDC infrastructures to mitigate some challenges associated with CBDC.

Recent pilot projects such as mBridge, launched by central banks of China, the UAE, Thailand, and Hong Kong, have been testing the use of a common ledger platform for real-time peer-to-peer transactions. The launch of several other projects, such as Project Mandala (involving Singapore, South Korea, and Malaysia) and Project Aber (involving Saudi Arabia and the UAE), is laying the groundwork for the widespread implementation of wholesale CBDCs.

Another potential avenue for collaboration includes forming partnerships with central banks to maintain reserves of digital cash to facilitate direct settlement. China, in particular, plans to develop e-CNY as a potential reserve currency alternative to the US dollar.

Interoperability and ownership are key challenges to CBDC implementation

While the use of wholesale CBDCs certainly comes forward as a boon, there are challenges in using these technology-driven digital currencies. CBDCs may have varying protocols, and interoperability between different CBDC frameworks remains a key challenge for implementing wholesale CBDCs for cross-border transactions.

Establishing common technical and operational standards is essential to ensure CBDC interoperability. Currently, most pilot programs involve CBDCs with common or similar technological frameworks and rules, which limit the application of wholesale CBDCs to a certain number of compatible entities.

Recent research projects are laying the groundwork for CBDCs’ compatibility with various ledgers and technical frameworks. However, significant testing will be required before compatibility can be established across the Asian region.

Ownership, governance, and regulatory oversight of wholesale CBDC technologies are other key concerns. Doubts exist over who will oversee the transactions and ledger entries, especially for any multi-party cross-border transaction.

Systems must also to adhere to anti-money laundering and counter-terrorism financing regulations. Varying financial laws may also hamper the seamless implementation of these anti-money laundering and counter-threat funding regulations across the region.

Lastly, like any digital asset, CBDCs are also susceptible to cyberattacks.

EOS Perspective

Wholesale CBDCs can potentially change the nature of cross-border transactions across Asia and globally.

We are likely to witness significant growth in test runs and pilot programs by several Asian countries to provide proof of concept for the applicability of wholesale CBDCs in countering the challenges associated with cross-border transactions. We can expect a spurt in CBDC alliances and treaties among countries with significant bilateral and intra-regional trade. Simultaneously, it may result in slightly reduced transaction volumes going through existing cross-border financial systems such as SWIFT.

The next stage of CBDC evolution is likely to coincide with the emergence of pilot programs involving multiple CBDCs with different technological frameworks, creating possibilities for easier and seamless cross-border transactions among banks or countries without any existing bilateral or regional partnerships.

These developments are likely to be aided by the development of enabling technologies such as RegTech (regulatory technologies) and SupTech (supervisory technologies), which could provide the sandbox environment for widespread testing of the CBDC systems, as well as lay the groundwork for potential regulatory systems to manage these infrastructures.

With the bulk of cross-border transactions still being conducted in the US dollar, wholesale CBDCs do not pose any imminent threat to its dominance. The US dollar’s future prospects in this role will depend on whether digital currencies such as e-CNY take off as a reserve currency, which is unlikely, at least in the short- to medium-term.

The overall success of wholesale CBDCs will depend on the level of cooperation that countries across Asia can develop over the next few years.

Prescribing Security Diagnosing and Treating the IoT Universe in Healthcare by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Prescribing Security: Diagnosing and Treating the IoT Universe in Healthcare

The integration of the Internet of Things (IoT) into the healthcare industry has significantly transformed the delivery of medical services, enhanced patient experiences, and revolutionized medical practices. While the benefits of IoT are undeniable, there are challenges that come with its adoption. Issues such as device hacking and data breaches pose significant obstacles that must be addressed. Therefore, it is essential for device manufacturers to design medical devices with caution. By taking a proactive approach and investing in robust cybersecurity measures during the design and development phases, manufacturers can create devices that are more secure and less vulnerable to hacking.

IoT has revolutionized the healthcare industry by enabling medical devices to connect and communicate with each other, as well as with healthcare providers and patients. These devices utilize cloud computing and collect valuable data in real time, allowing for remote monitoring, timely interventions, and personalized care.

The average hospital room worldwide has an estimated 15 to 20 interconnected medical devices. This number is steadily increasing due to the rising adoption of internet-connected devices. The market for IoT medical devices is close to US$40 billion as of 2023. With exponential growth, it is likely to cross US$150 billion over the next five years. This upward trajectory is geared towards reducing healthcare systems’ costs, enhancing patient care, and streamlining clinician workflows.

Healthcare organizations are not immune to cybersecurity breaches

Amid this inevitable growth in adoption, it is crucial to prioritize the security of medical devices to protect patients’ lives, safety, and privacy. While these devices have the potential to streamline and improve treatment, they also pose significant risks due to their susceptibility to cyberattacks.

According to a 2019 report by Fierce Healthcare, 82% of healthcare organizations experienced cyberattacks targeting IoT devices. Moreover, about 53% of medical and IoT devices in hospitals had vulnerabilities. Cybercriminals have honed in on the healthcare industry as a prime target, capitalizing on its perceived lack of robust cybersecurity protocols.

Healthcare bleeds out money without a cybersecurity cure

According to IBM’s Cost of a Data Breach 2023 report, the average cost of a cyberattack in the healthcare industry is US$4.45 million per breach, marking a 2.3% increase from the previous year’s average cost of US$4.35 million.

This significant uptick in costs since 2020, when the average overall cost of a data breach was US$3.86 million, represents a substantial 15.3% increase over three years. This growth underscores the importance of prioritizing cybersecurity measures to protect sensitive patient data and ensure the safety and integrity of medical devices in healthcare settings.

Unaddressed IoT challenges in medical devices lead to unauthorized access

Despite the many potential benefits of IoT medical devices in healthcare, the lack of adequate security measures continues to be one of their main challenges. Many devices do not have robust encryption protocols or authentication mechanisms, making them easy targets for hackers.

These vulnerabilities could potentially be exploited to gain unauthorized access to patient information or manipulate the device to deliver harmful treatments. As these devices become more interconnected with other healthcare systems, the potential cyberattacks only increase, posing a serious threat to patient safety.

Prescribing Security Diagnosing and Treating the IoT Universe in Healthcare by EOS Intelligence

Prescribing Security Diagnosing and Treating the IoT Universe in Healthcare by EOS Intelligence

Hackers endanger patients’ health and lives

Hackers can exploit vulnerabilities in IoT medical devices to gain access to sensitive patient information, alter treatment settings, or sabotage critical systems. This poses a grave threat to patient safety and privacy, as well as the overall integrity of healthcare infrastructure. Furthermore, since IoT devices are interconnected, a breach in one device could potentially compromise the entire network, leading to widespread disruptions and chaos in healthcare delivery.

One example of such a breach occurred in 2019 at a Springhill Medical Centre in the USA involving a ransomware attack. This attack disabled patient monitors for several days, leading to a substantial impact on patient care. A lawsuit has been filed, alleging that the disabled monitoring devices led to infant death during delivery at the center.

IoT medical devices need improved security to match technological advancements

The rapid pace of technological advancements in IoT medical devices often outpaces the development of security protocols. New features and functionalities are constantly added to these devices to improve patient care.

However, these updates may also introduce additional security vulnerabilities that cybercriminals can exploit. Many healthcare providers struggle to keep up with these evolving threats and may not have the resources or expertise to effectively secure their IoT devices on an ongoing basis.

Diversity of IoT devices complicates securing healthcare environments

The healthcare environment is characterized by a diverse range of interconnected devices, often developed by various manufacturers with varying security protocols, making it difficult to implement a cohesive security strategy across all devices. This diversity complicates efforts to achieve comprehensive visibility and security, as each device may require distinct monitoring and protection strategies.

Additionally, the sheer number of devices in use within a healthcare facility can overwhelm IT teams responsible for monitoring and securing them, increasing the likelihood of overlooking potential security risks.

Limited downtime poses cybersecurity challenges

IoT medical devices are used continuously in real time, leaving little room for downtime. This lack of downtime poses a challenge for security teams, as they have limited time to analyze the devices and implement necessary patches to ensure their security.

The constant use of these devices in healthcare settings highlights the importance of finding a balance between security and functionality in order to safeguard sensitive patient data and uphold the integrity of the healthcare system.

Devices’ size and continuous connection result in insufficient battery support

Another challenge in the realm of IoT devices is related to their powering. Many of these devices use batteries and their compact size restricts the capacity for large, durable batteries. They need to be constantly connected to transmit data, which continually drains power.

These devices’ limited power and memory make it difficult to incorporate encryption, continuous software updates, and authentication protocols that can protect sensitive patient information from hackers.

Durability of IoT medical devices poses a security risk

Additionally, IoT medical devices are engineered to have a long lifespan. Their durability can pose a security risk. Once a vendor ceases production or stops releasing updates for these devices, hospitals may continue to rely on outdated technology, making them vulnerable to cyberattacks.

Hospitals must play a role in safeguarding their IoT device systems

Securing healthcare IoT devices can be a complex task, but it is essential to implement a variety of solutions to guarantee their security.

Part of this responsibility lies on the healthcare institutions themselves. Hospitals must ensure regular software updates, avoid default settings, and provide comprehensive training to staff members. Healthcare providers must implement unique and multilayered login structures for every device, such as two-step logins, hard-coded passwords, firewalls, and fingerprint checks to ensure that patient information is securely stored.

Leading players’ solutions increase devices’ resilience to breaches

Advanced and complex security solutions

Prominent vendors, such as Medigate, Medcrypt, and Cynerio, provide advanced platforms designed to assist healthcare organizations in safeguarding their networks and connected medical devices.

These security vendors offer complex security solutions, including real-time threat detection, device monitoring, network activity visibility to medical device manufacturers, and vulnerability management solutions to enable healthcare providers to effectively identify and mitigate potential risks associated with their connected medical devices.

Detection and recovery plan

Cybersecurity providers are generally vigilant in offering detection and recovery services to safeguard medical assets and systems around the clock. In the event of a security breach, they must be able to swiftly implement response and recovery plans to mitigate the impact. With a focus on healthcare, they must be able to identify issues efficiently without overwhelming users with excessive information. They need to aim at taking instant action to restore normalcy as quickly as possible.

Network segmentation

Another important solution players should provide is network segmentation, which involves dividing devices into separate, private wireless networks to protect data in the event of a cyberattack. Firewalls and multi-factor authentication can achieve this. By segmenting the network into distinct zones, healthcare providers can isolate medical devices from other parts of the network, reducing the risk of a cyberattack spreading across the entire network. This segmentation also allows for more granular control over medical devices, limiting the potential for unauthorized access or tampering.

Modern network segmentation for medical devices now relies on technologies such as virtual LANs and subnets to keep up with advanced cyber threats. For instance, Cisco Systems, a multinational technology conglomerate, offers medical device security solutions whose key aspect is network segmentation. Cisco also provides specialized monitoring and analytics tools to assist healthcare organizations in detecting and responding to security incidents in real time. These tools can identify abnormal behavior on the network, alerting security teams to potential threats before they can cause harm.

AI technology and machine learning

IoT device security providers, such as IBM Corporation, Cylera, CyberMDX, Sternum, ClearDATA, and Palo Alto Networks, place emphasis on conducting comprehensive risk assessments during software validation to guarantee devices’ security. In the event of new cyberattacks, these providers inform stakeholders and offer solutions, such as security updates. They have integrated programs that utilize AI technology and machine learning to proactively manage risks and stay ahead of cybersecurity threats.

Security vendors contribute to IoT device safety protocols transformation

The cybersecurity industry is currently experiencing a surge of new companies that are transforming security protocols. Armis, a leading US-based asset intelligence cybersecurity company and provider of agentless device security solutions, is spearheading this movement.

Notably, Medtronic and Zimmer Biomet have incorporated Armis’ security platform into their products, such as insulin pumps and orthopedic devices. Armis offers the Armis Centrix platform, powered by the Armis AI-driven Asset Intelligence Engine. The platform has the capability to detect breaches, run routine security scans or updates, maintain asset visibility, identify blind spots, optimize resource allocation, and perform essential maintenance. Armis’ solutions encompass advanced threat intelligence and machine learning features, enabling the system to adapt to new and emerging threats. This proactive cybersecurity approach is essential in the healthcare sector, where any disruption or compromising of medical devices could have severe repercussions.

Collaboration is key to effectively managing cyberattacks

Collaborations between medical device manufacturers and cybersecurity vendors to combat IoT medical device hacking have great potential. It also facilitates the sharing of threat intelligence and best practices, enabling vendors and manufacturers to proactively address emerging threats and vulnerabilities. Their collaborative efforts center on safeguarding critical devices from cyber risks by implementing protective measures for both the devices and the data they collect.

Philips partnered with CyberMDX to create a vendor-neutral cybersecurity service

In November 2020, Philips, a prominent player in healthcare technology, partnered with CyberMDX, a cybersecurity expert specializing in medical devices. This partnership focused on enhancing the security of connected medical devices and systems, essential for protecting patient data and for the smooth operation of healthcare facilities.

Drawing from Philips’ industry expertise and CyberMDX’s cybersecurity solutions, together they provide vendor-neutral options to protect IoT medical devices. They focus on managing connected devices in hospital settings, whether they are managed or unmanaged, by utilizing a combination of risk assessment, detection, threat intelligence, and prevention capabilities in the constantly evolving healthcare technology landscape.

Medcrypt collaborated with NetRise to address cybersecurity issues

In August 2023, Medcrypt, a US-based proactive cybersecurity provider, partnered with NetRise, another US-based cybersecurity company. By combining Medcrypt’s experience in identifying and managing vulnerabilities with NetRise’s ability to develop Mobile Device Management software featuring a Software Bill of Materials (SBOM) for embedded devices and firmware, medical device manufacturers now have access to a comprehensive solution to protect their devices from potential cyber threats throughout their lifecycle.

Medcrypt integrated NetRise’s SBOM generation capabilities into the Helm tool, enabling continuous integration, analysis, and transparency of the ever-changing state of medical device software. This integration facilitates the proactive identification and mitigation of the most exploitable vulnerabilities, extending support for SBOMs across the entire lifecycle of medical devices. The resulting solution empowers medical device manufacturers to create, ingest, enhance, manage, and monitor SBOMs, providing invaluable insights into the vulnerabilities present in their embedded devices and firmware. This collaboration represents a significant advancement in bolstering cybersecurity measures within the healthcare industry.

The industry is moving towards Trojan-free devices to safeguard against cyberattacks

Among the various cybersecurity threats faced by IoT medical devices, hardware Trojans are emerging as a grave concern. Hardware Trojans involve the deliberate manipulation of an integrated circuit or electronic device to compromise its security features or functionality.

Hardware Trojans are typically small in size, consist of only a few gates, and alter the device chip’s functionality. Due to their small size, hardware Trojans are challenging to detect using traditional offline methods such as side-channel analysis or digital systems testing. As a result, the healthcare industry is increasingly prioritizing the development of Trojan-free medical devices to enhance the security of IoT medical devices.

Unlike other medical devices, Trojan-free devices are highly secure and challenging to breach. Attackers would need a high level of expertise to understand the device’s design blueprint through reverse engineering and then create a manipulation that can only be triggered under specific conditions.

Moreover, the development of Trojan-free medical devices presents a unique opportunity for manufacturers to drive innovation, improve patient care, advance cybersecurity solutions, and shape regulatory standards.

One example of a Trojan-free medical device is the Philips IntelliVue patient monitor, which tracks patients’ vital signs and provide real-time data. This device works with advanced network security measures, including firewalls, encryption, and intrusion detection/prevention systems, to safeguard against unauthorized access and malware infiltration. Its cybersecurity features are specifically designed to protect against potential threats such as unauthorized access and data breaches.

Boston Scientific’s S-ICD implantable cardioverter-defibrillator is another Trojan-free medical device. It treats patients at risk of sudden cardiac arrest by delivering an electric shock to restore normal heart rhythm. This device employs encryption to secure communication between the device and the programmer and authentication protocols to ensure that only authorized healthcare professionals can access and control it.

EOS Perspective

IoT has transformed numerous industries, with healthcare being no exception. In the realm of healthcare, IoT medical devices utilized in virtual wards, such as remote monitoring devices and wearable sensors, are susceptible to cyberattacks. These attacks can result in unauthorized access, data tampering, and disruption of patient care. Detecting and responding to cyber threats targeting medical devices is crucial.

To combat these threats, security vendors employed prevention systems, anomaly detection algorithms, and advanced analytics to identify potential cyberattacks and abnormal device behavior. Implementing robust incident response plans, conducting simulated exercises, and utilizing strong device security measures is imperative to safeguard against device-level cyber risks.

The field of cybersecurity in healthcare is intricate and constantly evolving. Addressing cybersecurity risks necessitates a comprehensive approach that encompasses technology, policies, regulations, and education. Continuous collaboration, vigilance, and adaptation to emerging threats are essential to ensure the security and safety of medical devices in the future.

Moreover, healthcare facilities must prioritize the implementation of robust device security risk management practices. This involves establishing standard protocols, automating device isolation, utilizing asset intelligence to minimize security breaches, and ensuring compliance with regulatory frameworks such as HIPAA, FDA, ISO 13485, and HITRUST when acquiring and managing connected medical devices.

In addition, healthcare facilities must provide comprehensive training to professionals who work with these devices on cybersecurity best practices and identifying potential security threats.

Collaboration between healthcare providers, device manufacturers, cybersecurity experts, and regulatory bodies is essential for enhancing the security of medical IoT devices. By sharing knowledge, resources, and best practices, stakeholders can collectively address vulnerabilities and safeguard healthcare systems.

Their collaborative efforts facilitate the adoption of SBOM formats, threat modeling processes, Secure Product Development Framework, encryption technologies, AI-based anomaly detection, regulatory frameworks, and secure hardware modules. This approach ensures a more secure environment for medical IoT devices and ultimately protects patient data and healthcare systems from potential cyber threats.

Innovations such as blockchain technology, biometric authentication, predictive analytics, regular patching or updates, and Trojan-free medical devices offer promising opportunities to enhance security measures in the healthcare sector. Trojan-free medical devices, in particular, show great potential in safeguarding patient data, ensuring device integrity, and maintaining the trustworthiness of healthcare technology. This not only improves device reliability but also reduces downtime, benefiting both patients and healthcare providers. This is likely the direction the industry will take in the long run.

By prioritizing proactive cybersecurity measures and compliance with regulations, healthcare security providers can offer potential solutions to enhance the security and integrity of medical devices and the data they handle.

Charting the RegTech Journey – Navigating Consolidation as the Next Vital Phase by EOS Intelligence
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Charting the RegTech Journey: Navigating Consolidation

RegTech, short for regulatory technology and often categorized as a subset of fintech, emerged in 2015. The RegTech industry was fragmented, with numerous small players targeting specific niches within the regulatory compliance landscape. However, the recent trend towards consolidation is reshaping the sector. Larger RegTech firms are increasingly acquiring smaller players to expand their offerings and solidify their market positions.

RegTech comprises powerful tools that leverage advanced technologies such as artificial intelligence (AI), automated machine learning (AML), and big data analytics. These technologies streamline regulatory compliance processes, addressing challenges from technology-driven economies, largely through automation. Automation plays a significant role in reassuring regulatory compliance professionals about the effectiveness and efficiency of RegTech solutions.

According to a 2023 report by Corlytics, a Dublin-based regulatory risk intelligence firm, regulatory penalties associated with legal and regulatory enforcement in the financial sector exceeded US$10.5 billion globally. This underscores the escalating pressure on financial institutions to comply with regulations, prompting them to turn to innovative technological solutions. RegTech has emerged as a promising avenue for organizations within the fintech ecosystem to efficiently navigate complex regulatory landscapes while reducing cost and time and improving compliance effectiveness.

Market landscape transformation through investments and strategic acquisitions

Investors increasingly recognize RegTech’s potential, and it remains a bright spot within the fintech ecosystem. Data from UK-based financial market platform Dealogic shows 116 global RegTech deals in 2023 with a total value of more than US$13.5 billion, demonstrating significant investment activity in the sector. Last year witnessed notable acquisitions across various markets, with larger financial services corporations and RegTech vendors acquiring smaller players to strengthen their market position through consolidation.

Key transactions, such as the acquisition of Adenza by Nasdaq for US$10.5 billion in 2023 and Finellix by Stellex Capital for US$176 million in 2022, underline the strategic importance of RegTech solutions for both financial and technology companies.

These developments reflect a broad strategic move to address the escalating compliance costs faced by banks and brokerages in the wake of regulatory reforms such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (simply known as the Dodd-Frank Act). The Dodd-Frank Act, introduced in the USA in 2010 following the 2007–2008 financial crisis, has had a profound impact on the global financial sector. The Act has prompted financial institutions globally to significantly improve their regulatory reporting systems and processes, leading to more extensive adoption of technology solutions. Dodd-Frank and other stringent regulatory measures have significantly increased compliance costs for financial institutions and companies operating in various sectors.

Larger financial services firms and RegTech companies are consolidating to integrate complementary financial solutions and expand their operations. In one such development, US-based automated RegTech player CUBE acquired UK-based counterpart The Hub Technology in 2023 to further boost their automated regulatory intelligence (ARI) abilities to reduce compliance risk and cost.

Consolidation within the RegTech sector aims to empower larger entities to effectively tackle challenges related to anti-financial crime measures, cross-selling opportunities, and regulatory compliance services, primarily among banking and brokerage clients. This strategy aims to diversify revenue streams, broaden market reach, and increase the serviceable market.

Simultaneously, M&A offers small and mid-size RegTech companies a strategic avenue to enhance capabilities, achieve accelerated growth, better competitive market positioning, and maximize value. While acquisitions often lead to integration within the larger corporate structure, there is still room for acquired smaller RegTech companies to maintain a level of independence.

In 2023, Corlytics acquired the UK-based RegTech firm Clausematch to integrate its capabilities into a comprehensive platform for managing the regulatory risk value chain for tier-1 clients. Despite the acquisition, Clausematch maintains its independence and is a strategic partner to Corlytics. It continues to serve existing clients while also extending its services to Corlytics tier-1 clients, including 14 of the top 50 global banks. This autonomy can be instrumental in fostering partnerships that are essential for scaling up and achieving sustainable growth in the ever-changing fintech regulatory ecosystem that demands agility and continuous innovation.

The appeal of RegTech’s one-stop-shop model

The concept of a one-stop shop model in the RegTech industry, facilitated by consolidation, appeals to businesses seeking streamlined and comprehensive compliance solutions. In the evolving financial market landscape, clients are increasingly preferring to consolidate their RegTech solutions under a single provider rather than engaging with multiple vendors. This demand stems from the desire for streamlined processes, reduced administrative burden, cost savings, and seamless integration of services.

RegTech companies can meet this demand and improve the overall customer experience by offering comprehensive end-to-end solutions and value-added services. In 2023, Muinmos, a Denmark-based RegTech company, saw substantial revenue growth as more clients flocked to the firm. This surge was attributed to Muinmos’ comprehensive platform, which manages the entire onboarding process, spanning from KYC/AML procedures to risk assessments and regulatory classification.

Through strategic acquisitions of smaller RegTech firms with specialized solutions, RegTech solution providers can further enhance their offerings, capitalizing on the trend for integrated solutions and establishing a competitive edge in the market.

Partnerships with smaller firms provide larger companies in the RegTech sector with advantages such as accelerated time-to-market and the opportunity to serve as a testing ground, paving the way for potential future acquisitions.

RegTech startups joining forces

Many RegTech startups are partnering to provide a broader range of regulatory solutions to their clients by enhancing their platforms and adding compatible services from other partners. This forms a robust entity with expanded capabilities to compete with established players.

In November 2023, Flagright, a German-based startup specializing in AML compliance and fraud prevention, formed a strategic alliance with Regtank Technology, a Singapore-based RegTech services provider. This partnership underscores their joint commitment to developing an advanced transaction monitoring solution for fintech companies using AI/ML algorithms. Additionally, these partnerships are likely to help startups reach more customers across various geographies, solving risk and compliance challenges for more businesses.

The double-edged sword of consolidation

For existing and emerging RegTech companies, consolidation presents a double-edged sword. As larger players consolidate and dominate the market, there may be fewer opportunities for investment in smaller, emerging RegTech startups. Investors may perceive greater risk in backing smaller players when larger, more established firms offer similar or more comprehensive solutions. This could lead to a concentration of investment in a few key players, potentially stifling innovation and diversity in the market.

Consolidation impact on the RegTech investment landscape

With fewer startups and a more prominent role for established players, the overall number of investment opportunities in RegTech may slow down in the short term. This could lead to a shift in focus from rapid innovation to the successful integration of acquired technologies as larger players seek to leverage their expanded capabilities and market presence.

Challenges faced by small firms and emerging startups

Consolidation within the RegTech sector could heighten entry barriers for new and smaller firms. Small companies are likely to face resource constraints compared to their larger counterparts. They may struggle to match the scale of investment, R&D capabilities, and market reach of consolidated firms, potentially limiting their ability to innovate and expand their market reach.

Opportunity for small vendors due to consolidation

Consolidation could create gaps in the market for specialized RegTech solutions catering to unaddressed regulatory needs within the RegTech industry. Consolidation efforts in the RegTech sector mainly target large tier-1 clients, including large banks and other financial institutions. However, there are potential gaps and opportunities in smaller businesses across non-financial verticals that require tailored regulatory solutions. This would likely prompt smaller companies to carve out niche areas of specialization within the evolving RegTech landscape.

Specializing in particular regulatory domains, industries, or technological niches allows smaller firms to distinguish themselves as providers of specialized solutions. This makes them appealing targets for acquisition or partnerships by larger players, driven by the ongoing consolidation trends in the RegTech sector.

EOS Perspective

Traditionally, many RegTech companies evolved as single-point solutions for specific regulations. The market is witnessing a shift away from multi-point solutions that address specific issues and moving towards modular solutions that offer flexibility and can be reconfigured to address diverse problems and industry verticals. This shift is likely to drive further consolidation as regulated entities seek mature, cost-effective solutions tailored to their needs.

Conventionally, RegTech solutions have primarily targeted large enterprises with significant budgets. However, we are witnessing a notable shift, as small RegTech companies are now offering affordable compliance solutions tailored to small and medium-sized enterprises (SMEs) as well. This shift is driven by the recognition of unique regulatory challenges faced by different sectors, such as healthcare, insurance, and energy. This recognition prompts small RegTech players to tap into opportunities arising from the growing demand for industry-specific RegTech solutions. This trend reflects a broader movement within the RegTech industry towards democratizing access to compliance tools and addressing the specific needs of diverse business sectors.

With venture funding slowing down due to the economic downturn, a rise in M&A activities is anticipated in the coming years. Due to the time-consuming nature of decision-making around procuring RegTech solutions by regulated entities, major RegTech players are expected to focus on developing and offering sticky RegTech solutions to ensure stable and recurring revenue growth. Consequently, this trend is likely to drive further consolidation within the large RegTech sector, as evidenced by Corolytics’ acquisition of ING SparQ RegTech and Clausematch in 2023, followed by a substantial investment from Verdane, an investment firm, in April 2024. This investment is poised to accelerate Corlytics’ M&A activity, signaling a shift towards the emergence of technology partners that provide unified platforms by integrating solutions from multiple firms through consolidation.

Denmark – A Trailblazer in Digital Health Innovation by EOS Intelligence
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Denmark – A Trailblazer in Digital Health Innovation

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The COVID-19 pandemic has spurred the need to embrace new digital tools and technologies within the healthcare sector. There has been a significant increase in the use of technology to provide care, resulting in improved health outcomes. In Europe, Denmark has made significant progress and is at the forefront of the digital health transformation with a 99% digitalization rate. Over the last few years, Denmark has strived to digitalize further its healthcare infrastructure, testing and leveraging technologies such as AI and robotics to implement them at full scale across the country. In this transformation, the Danish digital health system can be a source of valuable lessons, uncovering various opportunities it presents for health tech companies.

Demark’s digital health: Harnessing power from a robust public infrastructure

Denmark’s healthcare system is among the most expensive worldwide, with 10% of GDP allotted for healthcare expenditures and 90% publicly funded through taxes. The health infrastructure is highly digitalized, with almost 99% of healthcare communication done electronically.

The national e-health portal, Sundhed.dk, launched in 2003, plays a key role in Denmark’s digitalization, offering a comprehensive platform catering to both healthcare professionals and citizens alike. Sundhed.dk provides safe and secure access to an individual’s personal health records (from hospitals), medication information, vaccinations, laboratory results, appointments, and referrals. The portal is user-friendly and is regarded as one of the superior models for public healthcare information exchange worldwide.

Over the last 20 years, the Danish government has supported and invested in various digital health initiatives, rolled out several IT services, and strengthened its digital healthcare infrastructure. In 2007, the country introduced E-record, through which individuals can access their medical information from EHR systems using the Sundhed.dk portal. The government also launched Shared Medication Record, which has records of patients’ prescriptions, details of the doctor who prescribed the medicines, and information pertaining to where the medications were picked from. During the COVID-19 pandemic, the “My Doctor” app was introduced to facilitate video consultations between GPs and patients. These digital initiatives contribute to improved care coordination and increase the patient’s trust in the system.

Denmark – A Trailblazer in Digital Health Innovation by EOS Intelligence

Denmark – A Trailblazer in Digital Health Innovation by EOS Intelligence

Unraveling the blueprint: Denmark’s digital health success story

Well-formulated digital health strategies address the needs of patients and healthcare workers

Many countries develop digital health strategies, which are frequently focused solely on technical aspects, steering away from addressing the actual needs of patients and healthcare professionals. Moreover, these policies often function as plain vision documents with no clear description of action plans or the roles and responsibilities of various stakeholders.

In contrast, Denmark’s digital health strategy is well-formulated and primarily focused on addressing the needs of patients and healthcare workers. It provides a clear vision of how digital technology can help meet their needs. In addition, the strategies highlight the importance of cross-sectoral collaboration, detailing focus areas and specific initiatives that must be jointly executed. For instance, it clearly mentions how the health and education sectors should work together to promote digital health literacy.

Denmark’s well-crafted digital health policies are a cornerstone of its successful digital health transformation. Since 1999, the country has been updating these strategies every four years, ensuring ongoing review and modernization of its digital health infrastructure.

Governance models aid in the speedy integration and implementation of digital healthcare tools

Denmark follows a regional governance model instead of the top-down approach, controlled by the state (national) government. The states and municipalities are responsible for developing and implementing their own health IT solutions in alignment with the national strategy.

Further, the government has established several steering groups to aid in implementing and disseminating digital health initiatives for rapid digital uptake. For instance, Connected Digital Health in Denmark, a cross-governmental organization, manages, coordinates, and ensures the implementation of various action plans mentioned in the national digital health strategies.

In addition, the government also regularly engages in public-private partnerships to boost its digital capabilities. The country’s strong governance is considered one of the critical success factors for the digital health transition.

Common IT standards help in effective healthcare data exchange

Many countries have deployed digital health technologies; however, integration remains sparse, resulting in a fragmented digital landscape. Integrating patient information siloed across multiple healthcare segments is crucial for establishing a high-quality digital health infrastructure. The adoption of common IT standards helps facilitate this data exchange and integration.

Denmark has been using these standards since 1990 for electronic health data communication as well as improving workflows between public hospitals, general practitioners, private healthcare entities, specialists, laboratories, and home care services. The early development of these standards significantly increased electronic communication within the healthcare sector, contributing to the high level of digitalization of the Danish healthcare sector.

Strict testing protocols ensure digital health tools are user-friendly

The user-friendliness of digital technologies is considered one of the major factors for early e-health adoption. Denmark undertakes several initiatives to ensure that digital health tools and technologies are user-friendly and easy to use. For instance, the country collects feedback from healthcare stakeholders about their experience with various digital health solutions, checks if they are user-friendly, and uses the input received to develop new solutions.

The country has also implemented strict testing protocols for telehealth solutions by evaluating their performance on mobile devices and testing the products with a range of end users, including the elderly and people with disabilities.

Government’s focus on educating and training healthcare stakeholders helps them to use digital tools effectively

Denmark educates and trains healthcare workers to use digital tools appropriately. According to a 2020 Deloitte report, nearly 76.8 % of Danish clinicians mentioned that they are well-trained and supported in using digital health tools and solutions.

Local governments and hospitals in Denmark collaborate with tech professionals to provide support, education, and training on using digital solutions such as EMRs, telemedicine platforms, and shared IT standards for healthcare data exchange. Digital health literacy of front-line healthcare workers is one of the core objectives of the country’s digital health strategy.

Unlocking opportunities: Denmark’s digital health sector for health tech companies

According to Statistics Denmark, the percentage of the Danish population aged 75 or above is expected to double from 7.8% in 2017 to 14.4% in 2047. In addition, the country faces a severe labor shortage, with projections suggesting that by 2035, Denmark might have a shortage of 14,500 healthcare workers. These factors are expected to put increased pressure on the Danish healthcare system.

In order to tackle these challenges, Denmark’s government continues to invest in advanced innovative technologies and digitalization strategies. In 2018, the country launched a digital health strategy titled “A Coherent and Trustworthy Health Network for All: 2018-2024”, aiming to modernize the healthcare infrastructure further. Under this initiative, the country aims to expand telemedicine solutions, increase virtual care visits, and automate the administrative and clinical workflows within the Danish healthcare system. This initiative is creating opportunities for startups and companies offering health tech solutions in the areas of telemedicine, video consultations, remote patient monitoring, hospital automation, and diagnostics.

Danish government seeks to expand telemedicine solutions for various segments of the patient population

Denmark has been using telemedicine services since 2012, beginning with home monitoring solutions for Chronic Obstructive Pulmonary Disease (COPD) patients. The country seeks to further expand the rollout of telemedicine solutions for patients with COPD, chronic diseases, heart failure, comorbid conditions, and pregnant women facing complications. In December 2023, the government of Denmark invested about US$72 million to expand telemedicine solutions for these patients, offer digital rehabilitation courses, and increase the number of virtual consultations through GPs.

Various governmental organizations in Denmark have been looking to partner with companies providing innovative remote monitoring and virtual care solutions to facilitate home treatment.

For instance, in 2021, in collaboration with the local government, Trifork, a Denmark-based digital health company, developed a telemedicine solution called Telma for severe COPD patients. The solution provides COPD patients with medication, measuring tools, and devices to track pulse and oxygen levels at home. The Telma app transmits this data in real time and facilitates communication between healthcare professionals and patients through video consultations, thus lessening the need for frequent hospital visits.

Similarly, in 2022, two Denmark-based health tech companies, Copenhagen Center for Health Technology (CACHET) and Cortrium, forged a research collaboration to develop a novel technology to monitor a patient’s heart rhythm remotely. This allows heart failure patients to receive prompt medical care without visiting a hospital.

The Danish government is also looking to provide telerehabilitation services amidst the rising mental health issues across the country. In 2021, the government established the Centre for Digital Psychiatry to develop, test, and implement several nationwide digital services. In March 2023, the Center initiated a research project with Monsenso, a Danish mobile health company, to provide personalized digital treatment for patients with depression.

A rise in telemedicine programs catering to various segments of the patient population is expected in the forthcoming years. This surge in demand fuels the growth of companies offering telehealth solutions nationwide.

AI presents several opportunities for innovation and collaboration within the healthcare segment

Denmark actively seeks to integrate AI into its healthcare system, especially in diagnostics, presenting numerous opportunities for AI-based health companies to thrive. The country has established research and innovation centers across the country focusing on AI for uses such as identifying at-risk stroke patients, helping radiologists interpret scans, and assisting in other diagnostics.

In 2021, Denmark established the Radiology AI Test Center (RAIT) to accelerate the development and implementation of medical AI applications in the country. Through RAIT, private companies can test and validate their AI-based technologies in Denmark. For example, in 2021, through the RAIT program, several Danish hospitals in Copenhagen partnered with US-based imaging AI startup Enlitic to evaluate an AI-based algorithm to read chest X-rays. Similarly, in 2023, RAIT partnered with Cerebriu, a Denmark-based health tech company, to use AI to improve MRI imaging of the brain.

Investments in advanced digital technologies modernize healthcare infrastructure

As Denmark endeavors to digitalize its hospitals, ample opportunities arise for companies specializing in robotics and mobile health to improve hospital and clinical workflows, among other areas.

Some steps have been taken to digitalize hospitals. For instance, the Centre for Clinical Robotics (CCR), a research and innovation center for healthcare robotic technology in Denmark, aims to leverage robotic technology for various hospital processes, such as food service, cleaning, medication dispensing, clinical sample collection, etc.

Another interesting instance is the pilot project between Systematic, a Denmark-based software company, and physicians at the Aalborg University Hospital. Systematic has developed a communication platform called Columna Flow Clinical Tasking, which facilitates direct communication among the physicians at the Aalborg Hospital. The solution offers a real-time overview of the patients, including their medical conditions and the workload of hospital clinicians on duty. This empowers physicians to prioritize patients and efficiently allocate tasks during peak hospital hours.

EOS Perspective

The Danish health system is poised for an even more profound digital transformation in the coming years, aiming to improve patient accessibility and convenience. Denmark’s healthcare market is already highly digitalized, which provides a robust foundation for further digital transformation and innovation.

Home care and telemedicine, health data interoperability, AI-based diagnosis, healthcare automation, personalized medicine, and preventative health are likely the key focus areas for the next phase of digital health transformation.

Further, the country is looking to elevate patient care through its super hospital program, which involves consolidating smaller hospitals into larger, higher-capacity units. The aim is to provide superior medical care at lower costs. Technology will play a key role in improving healthcare delivery and patient outcomes in these hospitals, with applications across logistics, clinical decision support tools, diagnostic tools management, and patient engagement, among other areas.

These initiatives can be expected to make the Danish health system even more robust. The system is expected to move from a doctor-centric to a patient-centric care model, where patients would be actively involved in taking care of their own health. The country’s meticulously crafted digital health strategies, well-established digital infrastructure, and technology-proficient population lay a solid foundation to usher in the next wave of innovation.

As Denmark persists in its commitment to build a healthcare system fit for the future, there are abundant opportunities for health tech companies to thrive and drive innovation within the Danish healthcare industry.

FemTech A Game-Changer in Womens Healthcare by EOS Intelligence
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FemTech: A Game-Changer in Women’s Healthcare

Women’s healthcare is one of the most neglected and understudied fields in the healthcare sector. Despite substantial advances in medical sciences in recent years, there still exists a huge gap in the treatment of diseases that are specific to women. FemTech focuses on addressing some of these gaps and offers the potential to help tackle the longstanding issues of women’s health.

FemTech developed as an answer to inadequate healthcare for women

According to a 2018 article published in Our World in Data, a UK-based online scientific publication, human life expectancy has increased tremendously from 30 to 73 years during the last two centuries (1800–2018). But this leap has not been reflected in women’s life quality. A 2024 report published by the World Economic Forum and the McKinsey Health Institute indicated that women live 25% longer in poor health than men, although they typically outlive males.

FemTech, a group of technology-enabled solutions such as diagnostic tools, wearables, products, software, and services, aims to tackle women’s health issues, such as maternal, reproductive, menstrual, and sexual health, as well as menopause. An example is the UK-based Flo Health app that tracks ovulation and the menstrual cycle, offers customized health insights and tips, and a closed community for sharing concerns and queries. US-based Natural Cycles is another example. This application provides personalized insights based on each user’s menstrual cycle patterns. This novel approach to improving women’s health and well-being has been gaining more importance in recent years.

Several challenges slow down progress and widespread acceptance

While FemTech offers promising solutions to help diagnose and manage many health issues affecting women that were previously overlooked, several challenges are awaiting interested players.

One major bottleneck players face is the scarcity of investments. Many investors still consider FemTech a niche sector and shy away from investing compared to other healthcare fields. This situation is slightly improving, as the industry has seen an increase in investment in recent years. Data from Dealroom, an Amsterdam-based provider of data and insights on start-ups and tech ecosystems, indicated that the venture capital (VC) funding into FemTech startups reached US$2.1 billion in 2021, an all-time high.

Despite this increase in investment in FemTech, the total funding for this sector still trails other sectors, especially if it is female-led. The CEO of a leading US-based fertility tracker Mira, said in an interview with Forbes that though 70% of FemTech startups are female-founded, male-owned businesses tend to raise more capital.

Investors and lenders often have unconscious biases against female entrepreneurs, affecting their willingness to invest in female-led businesses, according to a 2020 study published in the Journal of Financial Economics, a peer-reviewed financial journal. Also, women might only have restricted access to male-dominated fundraising sources, including crowdfunding websites, angel investors, and VC firms. Similarly, the traditional male dominance in some areas, such as technology and finance, can also lead to power imbalances in fundraising and limit the options available to women.

Insufficient R&D support is another major challenge faced by players in the FemTech sector. This can be seen from the fact that a significant proportion of the funding allocated to healthcare R&D is not focused on issues that directly impact women’s health and well-being, with a meager 4% dedicated to this area according to a 2018 article published in Forbes. This insufficient funding can cause innovation stagnation, set back product development, and reduce market opportunities.

The inadequate representation of women in clinical trials is another difficulty faced by FemTech companies. This lack of representation has created a knowledge gap in understanding important facets of women’s health, such as female anatomy, physiology, health issues, etc. A 2022 study published in Contemporary Clinical Trials, a peer-reviewed journal, showed that though women constitute 50.8% of the US population, just 41.2% of those involved in clinical trials were female. This creates a certain lack of awareness of how women’s bodies work, making it challenging for FemTech businesses to develop effective solutions.

Cybersecurity issues are also creating challenges in the development of FemTech. A joint study by Newcastle University, Royal Holloway, University of London, and ETH Zurich found serious privacy, security, and safety concerns that could put users at risk. The research indicated the danger of leaking sensitive information, such as fertility, medical data, etc., to third parties.

Cultural and social taboos are another bottleneck faced by FemTech companies. Female-specific issues such as postpartum depression and premenstrual syndrome are rarely openly discussed. This makes bringing societal focus to FemTech products a difficult task.

FemTech A Game-Changer in Women's Healthcare by EOS Intelligence

FemTech A Game-Changer in Women’s Healthcare by EOS Intelligence

FemTech industry is seeing significant development in some segments

Though confronting numerous challenges, FemTech remains a promising industry for interested players with its projected market growth. The FemTech market, estimated at US$40.2 billion in 2020, is expected to reach US$75.1 billion in 2025, according to a 2021 report by the US-based market research agency Arizton Advisory & Intelligence.

General health and wellness is the fastest-growing segment

FemTech offers several solutions for improving women’s health across various segments, with general health and wellness companies attracting the most VC investment, followed by reproductive health and contraception.

The general health and wellness segment combines digital health clinics, mental health services, and direct-to-consumer products. Since companies in this segment focus on broad-ranging solutions that address multiple issues, demand for them is expected to rise.

An example is Maven, a New York-based company offering a holistic solution encompassing pre- and post-pregnancy care. This virtual clinic provides 24/7 access to healthcare professionals, including mental health therapists, relationship consultants, and sleep coaches. In 2022, Maven attracted US$300 million in funding from prominent investors and individual strategic partners.

Another example is Stockholm-based Grace Health, acquired by Penda Health, a Kenyan medical care chain in 2023. It uses an automated health assistant called Grace to monitor and understand women’s sexual and reproductive well-being and receive timely reminders and notifications. The company is also expanding its local footprint in key African markets, including Nigeria, Kenya, and Ghana, to solidify its position as a market leader in these regions.

Reproductive health segment is also seeing strong demand

The reproductive health segment and menstruation care are also expected to continue holding the interest of investors and customers alike. According to the NIH, in the USA, 20% of women are now having their first child after turning 35, owing to a greater emphasis on education and career. With increasing age, some women may experience difficulty before, during, or after pregnancy. Women will also need to effectively and accurately track their fertility to make informed reproductive choices. This is likely to greatly contribute to in increased demand for FemTech reproductive health solutions.

An example is the Clue App, a Germany-based fertility tracker that leverages user data to compute and predict individuals’ periods and PMS. In 2023, the company raised US$7.6 million in funding and partnered with global universities such as the University of Exeter to bridge the diagnosis gap for women’s health conditions. This collaboration is expected to create new trends in managing female health issues.

Oncology products are now aimed at individuals and medical professionals

Development is also underway in the oncology segment. An example is Nevada-based Cyrcadia Health developing a breast monitor that tracks changes in breast tissue temperature over time to aid in the detection and risk management of breast cancer. The monitor consists of two patches that track temperature changes and send the data anonymously to the Cyrcadia Health core lab. This data is analyzed using machine learning (ML) algorithms and predictive analytics software to identify and categorize abnormal circadian patterns in healthy breast tissue. The results are then delivered to healthcare providers. This solution, when it becomes available in the market, is expected to enable women to take more proactive control of their breast health.

Cancer continues to be a leading cause of women’s death both in middle-income and high-income countries, according to a 2017 article published in Cancer Epidemiology, Biomarkers & Prevention, a peer-reviewed journal. Therefore, the focus on FemTech oriented at breast cancer and cancer in general is expected to gain momentum in the future.

Stigmatized conditions and marginalized subpopulations are increasingly addressed

Many FemTech companies are now exploring areas beyond menstrual and reproductive care and addressing stigmatized and unmet conditions such as preterm birth, endometriosis, pelvic care, and sexual health.

An example is London-based Elvie, a company that addresses pelvic floor dysfunction, a common and often overlooked health issue affecting many women. According to the NIH, 27% of women aged 40-59 and 37% of women aged 60-79 experience some form of pelvic floor dysfunction. Elvie has developed a Kegel trainer that uses biofeedback technology to improve pelvic and sexual health through five-minute workouts. The development of these solutions is expected to persuade more women to seek treatment and improve the diagnosis of these health conditions.

Similarly, apps are also being introduced for different sections of the population such as LGBTQ+, black women, and women from low and middle-income societies. US-based InovCares, an app designed to address the crisis of maternal mortality affecting Black women, is an example. This virtual OB-GYN platform connects users with culturally sensitive healthcare professionals who cater to various health needs, including fertility, childbirth, and breastfeeding.

Solutions are being developed in various geographies

While FemTech solutions development is concentrated in the USA and Europe, it is also visible in developing geographies such as Africa and Southeast Asia. An example is Indonesia’s BukuBumil which provides information on various aspects of pregnancy, including fertility, maternal health, baby immunizations, family planning, and post-pregnancy care in the Indonesian language. The platform also allows users to track a baby’s development and milestones.

Another one is Ethiopia-based YeneHealth, a multilingual and culturally responsive platform with AI-powered trackers for menstrual cycle, pregnancy, and medication management.

AI and ML are expected to shape the future of FemTech

Technological advancements are creating waves in the FemTech industry. Many companies are developing smart wearables and AI-powered solutions. Zurich-based Ava Women has developed a wearable, the Ava bracelet (available without prescription), to track hormonal changes. It allows users to monitor their ovulation and detect potential health issues. Ava’s technology uses big data and AI to provide accurate and personalized insights.

Similarly, Ovum, an Australia-based health management app, currently in its pilot phase, offers an AI health assistant designed for women to generate a dataset to improve treatments and diagnostics of various conditions. The app integrates and stores medical records, allowing users to track their health and receive personalized recommendations. This comprehensive data repository is crucial for complex or chronic conditions such as endometriosis, where a diagnosis can take years.

Experts believe the widespread use of AI and ML in FemTech apps will help players provide more accurate and data-driven solutions to users. AI can also analyze large datasets and use predictive analytics to anticipate health risks, such as gestational diabetes or pre-eclampsia.

EOS Perspective

The FemTech landscape, though still developing, is expected to expand more and grow quickly, especially with the increasing discussion around female health, Amazon CTO Werner Vogels commented at the 2023 AWS re:Invent conference, the largest conference in the cloud computing community. He has highlighted the significant potential of FemTech to transform the female healthcare system, specifically considering that women make up 50% of the population and account for 80% of consumer healthcare decisions.

FemTech has also the potential to significantly impact the healthcare sector and the global economy as a whole in the coming years. A 2024 report by the McKinsey Health Institute indicated that improving women’s health could boost the world economy by at least US$1 trillion annually.

The market is expected to see FemTech players widen their business scope, offer multiple services, and address a broader set of health issues. An example of this trend is UK-based Peppy, which initially helped organizations better support their women staff members after they had a baby, but now also deals with menopausal issues. This shift demonstrates a broader approach to women’s health under a single solution and reflects a development towards more comprehensive and inclusive offerings within FemTech.

Since FemTech is still developing, extensive R&D can be expected in the coming years. Experts believe health issues affecting older women also offer interested parties a research investment opportunity. Even now, in discussions and debates regarding FemTech, the diseases suffered by older women get overlooked. This makes it a promising area for future developments.

As the FemTech market expands, it is likely to attract collaborations from players operating outside the healthcare sector. One of the first examples of this was seen in August 2021, when the French cosmetic giant L’Oréal partnered with Clue to research the connection between the menstrual cycle and skin health to improve its skincare products. Such collaborations, whether just publicity stunts for cosmetic companies or not, can help put FemTech solutions on the map of legitimate tools close to women’s health. Considering that FemTech is still considered a niche sector, this can draw attention to the relevance of this market and its players and, consequently, stimulate investment.

Over the long term, women-led companies are expected to create more effective FemTech solutions that identify and cater to women’s unique healthcare requirements. The key factor behind it is that women are better placed to understand the health issues affecting women. A 2022 study published in Harvard Business School’s digital research publication Working Knowledge has also indicated that female-led research teams are more likely to study conditions that impact both genders than male-led ones. With more women stepping into STEM (science, technology, engineering, and mathematics) roles and female-led FemTech start-ups emerging, there is a promise of a more comprehensive scope of FemTech solutions.

A 2023 article published in Harvard Business Review noted an important trend that may positively affect the FemTech market: female investors are more likely to invest in and support female entrepreneurs. This suggests the potential for more capital flowing into women-led businesses, including in FemTech. As more women take on senior leadership roles in both FemTech startups and VC firms, this could substantially propel the industry growth.

P2P Lending Needs More than Just an Appetite for Investment by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

P2P Lending Needs More than Just an Appetite for Investment to Sustain Its Growth

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Peer-to-peer (P2P) lending has emerged as a global financial phenomenon. It has revolutionized the way individuals access loans. The innovation of P2P lending has experienced varying degrees of success and turbulence in different regions, notably India, China, and the USA. Understanding the reasons behind the rise and fall of P2P lending across these major markets provides critical insights into the global dynamics of this industry.

P2P lending – good old loans with a modern take

Peer-to-peer (P2P) lending is giving loans through an online platform that connects lenders and borrowers to exchange goods, services, or money directly by eliminating traditional intermediaries such as banks. Financial technology facilitates P2P lending, directly connecting individuals or businesses with investors.

Lenders and borrowers need to register with a P2P platform before conducting any transactions. The registration entails an AI-based evaluation of the borrowers to assess their credit score, employment details, income, and credit history. It also monitors their social media activities, including usage patterns and interactions. Using these assessments, the borrowers’ creditworthiness is determined, categorizing them into various risk tiers and informing the interest rates offered.

Subsequently, lenders can make informed decisions about lending money based on borrowers’ assessed scores. This empowers them to select suitable borrowers and enables borrowers to choose appropriate lenders. The P2P platform charges fees from both parties for its services instead of deriving profit from monthly installments.

To mitigate fraudulent activities, certain regulatory bodies oversee these platforms to ensure compliance with regulations and maintain transparency. For example, P2P lending in the USA is regulated at the federal and state levels. The US Securities and Exchange Commission (SEC) oversees the investors of the P2P lending platforms, while the Federal Trade Commission and the Consumer Protection Financial Bureau oversee the borrowers. In India, all P2P lending platforms must register as Non-Banking Financial Companies (NBFC)-P2P Lenders with the Reserve Bank of India (RBI).

The global P2P lending market is expected to reach US$705.81 billion by 2030 up from US$83.79 billion in 2021, at a 26.7% CAGR during 2022-2030, according to Precedence Research.

In addition to the increasing demand for financial services, factors such as lower operating fees compared to traditional financial services, quicker loan approvals, and the adoption of digitization in the banking sector drive the growth of the P2P lending market.

P2P Lending Needs More than Just Appetite for Investment by EOS Intelligence

P2P Lending Needs More than Just Appetite for Investment by EOS Intelligence

China’s P2P lending – started strong but faced a downturn

China’s P2P lending industry witnessed speedy development since 2007. There were 3,383 P2P lending platforms running in China with around RMB 130 billion (~US$18.2 billion) in combined monthly transactions in January 2016, as per the Home of Online Lending, an organization that collects and assembles P2P data from various sources in China. Founded in August 2007, PPDai or Paipaidai, currently known as FinVolution Group, was the first online P2P lending platform in China. PPDai was listed on the New York Stock Exchange in November 2017.

However, this burgeoning growth of the P2P lending industry in China was unsustainable and short-lived. This was evident from the fact that out of 6,607 P2P lending platforms, 6,277 were closed and problematic, leaving only 330 P2P lending platforms in business in China as of August 2020, as per the Home of Online Lending. As of August 2020, the lenders of the collapsed P2P lending industry of China owed depositors US$115 billion.

There were several Ponzi schemes related to untrustworthy P2P lending platforms enticing potential investors with attractive bonuses for referring family and friends, as reported by the Chinese media by the end of 2015. For example, in early 2015, Ezubao, with 900,000 investors, went bust when it turned out to be a Ponzi scheme with US$9 billion. Some P2P platforms were found creating fictional information about the borrowers in order to create groups of assets, and these platforms utilized funds to fulfill their own business requirements.

Although until early 2016, no regulatory authorities were overseeing P2P platforms in the country, it was believed that the Chinese government was observing the industry closely. Three bodies (The China Banking Regulatory Commission regulating P2P lending business, the Central Ministry of Industry and Information Technology supervising the telecom business of P2P lending, and the Cyber Administration of China developing rules, managing administrative licenses, and control over internet regulation and censorship in China) together announced the Interim Measures on Administration of the Business Activities of Peer-to-Peer Lending Information Intermediaries (“Interim Measures”) in August 2016.

Interim Measures became China’s first regulatory framework for the P2P lending industry. According to the Measures, a P2P lending platform’s scope of business in China is limited to acting as lending information intermediaries. As per the new rules, P2P lending platforms were mandated to establish custodian accounts with registered financial institutions for investor and borrower funds previously held by them. This was done to decrease the risks associated with situations when P2P lending platform owners flee with the investors’ money.

Interim Measures also mandated that P2P lending platforms register with the local financial regulatory body. The Measures provided P2P lending platform owners with a twelve-month timeline for implementing all the mandates. However, there was a delay in the implementation, as the registration and rectification processes were scheduled to be completed by June 2018, but they were not complete as of August 2018.

The exponential growth of P2P lending platforms in China resulted in several crashes due to cash shortfalls, defaults, frauds, and closures, causing massive financial losses for lenders. Such market scandals made it difficult for investors and borrowers in China to survive. They presented difficulties in acquiring financial resources, and the platforms faced a situation where investors started withdrawing their investments, thus bringing about the ultimate crash of the P2P lending industry in China.

Indian P2P lending – bright future fueled by regulators

P2P lending started in early 2014 in India. However, it began gaining significance in September 2017 when the Reserve Bank of India (RBI) decided to regulate P2P lending in the country.

People in India started using online platforms to borrow and lend funds to various untapped markets characterized by less developed infrastructure and lower investment activity. The method of borrowing changed over time. Borrowers who found it difficult to access credit from financial institutions were borrowing money from relatives, friends, acquaintances, lenders, colleagues, and business partners. The revolution took place via the intervention of digital ways of funding the credit ecosystem.

In September 2017, RBI introduced regulatory guidelines that ensured P2P lending through non-banking financial companies (NBFCs). In October 2017, RBI published a different framework for the P2P lending platforms. RBI categorized these rules as NBFC-P2P. The regulatory norms have enabled P2P lending platforms to create adaptable lending and borrowing models, including the development of flexible loan tenures, interest rate structures, and more.

Later, in 2018, RBI published a list comprising names of the first five companies registered with NBFC-P2P lending. The registration list helped ensure a secure, regulated sector and protect the interests of lenders and borrowers. RBI, in one of its regulations, mentioned a cap of Rs.5,000,000 (~US$60,000), which means if lenders invest money above Rs.1,000,000 (~US$12,000) across P2P platforms, they are required to submit a certificate from a practicing Chartered Accountant certifying a minimum net worth of Rs.5,000,000. This also means that the borrower must certify the difference between their assets and liabilities to show their financial strength. The introduction of the cap discouraged many lenders from giving out big loans.

According to RBI, fund transfers between participants on the P2P lending platform should be made through the escrow account mechanism. This means that all transactions will be processed via bank accounts, and cash transactions are strictly prohibited.

RBI mandated that P2P lending platforms be members of the Credit Information Companies, entities that maintain credit-related information about businesses and individuals. This regulation by RBI was welcomed by P2P platforms but separated less powerful players from the P2P market. The inclusion of rules has brought higher transparency, credibility, and stability to P2P lending. However, they have also increased the operation cost for P2P lending platforms and decreased the activities of lenders and borrowers.

All these changes have helped borrowers obtain loans more easily and protected lenders from fraudulent activities. According to IndustryARC, India’s P2P lending market is predicted to reach US$10.5 billion with a CAGR of 21.6% between 2021 and 2026. Market transparency in P2P lending, facilitated by technologies such as blockchain and smart contracts, has contributed to the growth of the P2P lending market.

Government promotion of cashless technology in P2P lending has reshaped the financial sector, gaining significant momentum over the past years. The introduction of AI and machine learning, along with RBI norms, has created a more secure marketplace for investors and borrowers. Innovations and new players in the P2P market are expected to impact the growth of P2P lending in the future.

P2P lending in the USA – star performer driven by technologies

The P2P lending market shows significant growth in the North American market with a larger size, higher revenue, and rapid growth. Several platforms, such as Lending Club (founded in 2006) and Prosper (founded in 2005), supported the growth of the P2P lending market in the USA by making P2P lending easy and secure. These platforms helped in attracting a large number of borrowers and investors. In the USA, the adoption of mobile and digital technologies such as Venmo, which was acquired by PayPal in 2013, and Squash Cash increased customer interest in digital transfer capabilities.

The USA has achieved remarkable success in P2P lending compared to other countries, partially due to the implementation of various payment technologies, including the EMV (Europay, Mastercard, and Visa) smart payment card protocol used as an electronic payment method. This success can be attributed to the presence of adequate legal frameworks and well-defined strategies for generating revenue.

One contributing factor to the rise of P2P lending in the USA has been the emergence and growth of small and medium-sized enterprises (SMEs actively involved in P2P lending activities). These platforms helped reduce the cost of office setups, maintenance, staffing, etc., and thus helped boost the growth of P2P lending.

One of the reasons behind the increase in the P2P lending market was the COVID-19 pandemic in 2020. At a time when major businesses and organizations were facing difficulties regarding finance and operations, P2P lending platforms helped them to raise funds for their operations through online lending platforms such as i2iFunding, Faircent, Lendbox, etc., allowing a direct lending process without the involvement of third-party participants, such as banks.

Technological advancements, such as blockchain, are another reason behind the increase in the P2P lending market in the USA. They eliminated the need for physical branches and reduced operational costs. They reached global audiences such as individuals and businesses in underserved or remote areas. They also helped in reducing the risk of fraud and improve financial transactions. Undoubtedly, the P2P lending market is growing largely thanks to the adoption of new technologies.

EOS Perspective

Peer-to-peer (P2P) lending has shown distinct trends in India, China, and the USA. India and China witnessed a decline in their P2P lending markets due to regulatory hurdles aimed at addressing issues such as fraud and investor protection. Conversely, the USA experienced a surge in P2P lending activities. This uptick can be attributed to a well-established regulatory framework and a sustained appetite for alternative lending solutions. P2P lending platforms in the USA have been able to offer borrowers access to credit while providing appealing investment opportunities to lenders, all while adhering to regulatory standards.

Many new developments in P2P lending are helping the platforms become successful. One such development is the integration of decentralized finance (DeFi), a financial technology that works on a secure distributed ledger. The DeFi technology, born in 2018, aims to create a transparent, open, and permissionless financial system operating on blockchain networks such as Bitcoin or Ethereum.

DeFi in the USA empowers individuals with P2P digital exchange by challenging the centralized financial system by eliminating banks’ fees and other charges. DeFi allows a P2P lending platform to access a global pool of liquidity (which means a collection of digital assets to enable trading on DeFi), reduces costs and risks, and offers more flexible and customized products.

Artificial Intelligence and Machine Learning will continue to be the solutions that transform P2P lending with better data analysis, credit scoring, risk assessments, and fraud detection capabilities. AI will also allow for efficient and more personalized services to both lenders and borrowers.

Regulatory authorities, with their frameworks, have saved several platforms from data breaches, tax compliance issues, consumer protection concerns, and cyberattacks. These authorities, together with industrial associations, will continue to create innovative and adaptive solutions such as sandbox programs (a time-bound, controlled, and live testing environment involving parameters within which the firm must operate).

Looking at the history of some of the key P2P lending markets, it is evident that creating a more robust, secure, and dependable P2P lending ecosystem necessitates technological innovations and establishing a practical regulatory framework to ensure the safety of financial activities.

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