FinTech is a segment sitting right at the intersection of the financial services and technology sectors, and its goal is to innovate products and services that are traditionally offered by the financial services industry. FinTech is gaining significant momentum and causing massive disruption to the traditional value chain. Listed below are the emerging trends that will be most significant in the years to come in each area of the Financial Services industry. These key trends not only promise to enhance the customer experience and sophisticated data analytics, but also enhance cybersecurity.
1) Banks are adopting technologies that will improve the digital customer experience: Traditional banks are now shifting focus towards virtual channels by implementing technology solutions and are developing new methods to reach, engage and retain customers. With a goal to pursue a renewed digital customer experience, banks are engaging in FinTech to provide customer experiences on a par with large tech companies.
2) Money Transfer and Payment segments are prioritizing security and increased ease of payment platforms: The key driver of the evolving money transfer and payment platform is the adoption of smartphones. Consumers who prefer using cellphones to carry out transactions, expect immediacy, convenience and security to be integral to payments. Fintechs are working in conjunction with technology firms and traditional money transfer platforms to develop solutions that enable transfer of funds globally in real-time with enhanced security.
3) Use of Robo-advisors for asset and wealth management: There is a clear shift from technology-enabled human advice to human-supported technology-driven advice in the area of wealth and asset management. Financial institutions are focusing on increased sophistication of data analytics to better identify and quantify risk. The proliferation of data along with new ways to capture it and the declining cost of performing these operations, is reshaping the investment landscape.
4) Blockchain: This technology is rewriting the Financial Services rulebook. Blockchain is a new technology that combines a number of mathematical and cryptographic principles in order to maintain a database between multiple participants without the need for any third party validator or reconciliation. In simple terms, it is a secure and distributed ledger. Blockchain represents the next evolutionary jump in business process optimization, along with offering significant potential for multiple other use cases, for instance healthcare, smart contracts, IoT.
In conclusion, whether or not financial institutions adopt digital strategies, integrating FinTech is going to be essential and given the speed at which technology develops, incumbents cannot afford to ignore FinTech.
References: http://www.pwc.com/gx/en/advisory-services/FinTech/pwc-fintech-global-report.pdf