The Future of Fintech Five technology trends driving the financial services industry.

Transcription

1 Five technology trends driving the financial services industry. Originally designating any financial services-specific technology, fintech has emerged as an industry in its own right. Investment in fintech firms totaled $19.1 billion in 2015, more than double that of Some 4,000 fintech companies now challenge banks in every aspect of their business. 2 But established players are fighting back with new digital capabilities and fintech partnerships. Here are six fintech trends every financial services company should watch. Incumbent financial services companies: 3 80% say business is at risk to innovators 56% consider disruption to be at the heart of their strategy 82% plan to grow fintech partnerships in the next five years 1 The Pulse of Fintech, Q3 2016, KPMG, The Need for Speed: 2016 Banking Industry Outlook Survey, KPMG, Redrawing the Lines: Fintech s Growing Influence on Financial Services, PwC, 2017

2 (AI) Financial services companies increasingly recognize that their industry will be transformed by automated core functions run by software that continually learns and improves. 86% Banks that say widespread use of AI will provide competitive advantage 4 30% Large financial companies investing in AI 5 Bank Perceptions of AI 6 AI will transform how banks gather data & interact with customers AI will enable a human-like customer experience AI will be the primary means of interacting with customers within three years AI could become the face of the brand 79% 78% 76% 71% 4 Intelligent Automation: The Essential New Co-worker in Digital Banking, Accenture, Redrawing the Lines: Fintech s Growing Influence on Financial Services, PwC, Accenture Banking Technology Vision 2017, Accenture, March 2017

3 are software programs that leverage business-to-consumer text messaging to automate bank processes and customer interactions. Bank Chatbot Deployment Plans 7 15% 13% 26% 15% 31% Have a chatbot Have an active chatbot project Plan to have a chatbot in one year Plan to have a chatbot in two to three years No plans for a chatbot Top Three Reasons Consumers Like Chat 8 Resolve problems more quickly 53% No need to use a separate service or app 45% Have a record of my communication 36% 7 As Take Hold, Banks Have Their Pick of Styles, American Banker, February 2017, Citing Personetics Data 8 in Banking Report, Business Insider, 2016

4 provide automated portfolio planning, asset allocation, risk assessment and other digital tools. By delivering services at lower costs, they reach a broader customer base and disintermediate traditional providers. 60% Wealth managers who fear losing business to fintechs 9 70% High-net-worth individuals who say online investment tools can positively influence wealth managers advice and decisions 10 Industry Segments Affected by Automated Investment Advice 11 12% 8% 9% 16% 54% Asset management Banking Securities Insurance Other/None 9 Beyond Automated Advice: How Fintech Is Shaping Asset & Wealth Management, PwC, Investors Attitudes Towards Robo-advisors: Evidence From the U.S. and the U.K., MyPrivateBanking, May Fintech Survey Report, CFA Institute, April 2016

5 Traditional forms of payment remain prominent, but digital is gaining converts and increasing competition across and beyond industry segments. Consumer Use of Payment Options 12 TRADITIONAL DIGITAL 60% 56% 58% 55% 53% 54% % 19% 13% 16% 18% 23% 16% 21% 14% 22% 14% 19% 13% 21% 12% 12% Cash Debit card Credit card Check Prepaid card PayPal Retailer app Card-network mobile wallet Bank mobile wallet Tech-giant mobile wallet Digital currency Most Trusted Providers of Mobile Payments 13 Traditional card providers 73% Alternative payment providers 63% Established retail banks Tech giants 62% 59% Tech startups 24% 12, North American Consumer Survey, Accenture, 2016

6 , the technology behind bitcoin, maintains a linked list of records, called blocks, that can t be altered. The result is a distributed ledger that can permanently and verifiably record transactions. 77% Financial services companies that plan to use blockchain in a production system or process by $20B Potential annual reduction in bank infrastructure costs from distributed ledger technology by Across industries: 16 61% of executives say they have broad to expert knowledge of blockchain 39% have little knowledge of blockchain For those with broad to expert knowledge: 17 42% believe blockchain will disrupt their industry 55% say they will lose competitiveness if they don t adopt it In financial services: 18 16% have deployed blockchain 24% plan to deploy blockchain in 2017 Key reasons financial services companies say they ll use blockchain: 19 37% better security 36% lower cost and higher speed 24% new business models or revenue streams 14 Redrawing the Lines: Fintech s Growing Influence on Financial Services, Pwc, The Fintech 2.0 Paper: Rebooting Financial Services, Oliver Wyman, June , 17, 18, 19 Building Up, Deloitte, 2016 Accenture is a registered trademark of Accenture. Business Insider is a registered trademark of Business Insider Inc. CFA Institute is a registered trademark of CFA Institute. Deloitte is a registered trademark of Deloitte Touche Tohmatsu. KPMG is a registered trademark of KPMG Int l. My Private Banking is a registered trademark of Avescon AG. Paypal is a registered trademark of PayPal Inc. PwC is a registered trademark of the Trustees of the PwC Business Trust. All data cited in this article is used by permission.