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 2014. 1 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, 2016 2 The Need for Speed: 2016 Banking Industry Outlook Survey, KPMG, 2016 3 Redrawing the Lines: Fintech s Growing Influence on Financial Services, PwC, 2017
(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, 2016 5 Redrawing the Lines: Fintech s Growing Influence on Financial Services, PwC, 2017 6 Accenture Banking Technology Vision 2017, Accenture, March 2017
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
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, 2016 10 Investors Attitudes Towards Robo-advisors: Evidence From the U.S. and the U.K., MyPrivateBanking, May 2016 11 Fintech Survey Report, CFA Institute, April 2016
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% 2016 2020 20% 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, 13 2016 North American Consumer Survey, Accenture, 2016
, 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 2020 14 $20B Potential annual reduction in bank infrastructure costs from distributed ledger technology by 2022 15 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, 2017 15 The Fintech 2.0 Paper: Rebooting Financial Services, Oliver Wyman, June 2015 16, 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.