The
WEF report says major disruptions are in store for many once highly profitable
financial services businesses and that the world's top banks and insurers are
being forced to review their business models amid rapid inroads by nimble
"fintech" start-ups, which are reshaping what consumers and
businesses expect out of financial services. The
research study, based on 15 months of interviews and workshops with executives from
financial institutions and fintech start-ups, joins a flood of recent reports
showing technology is eroding the bulwarks of the financial services industry
just as it did in areas such as travel and entertainment a decade ago.
Rapidly advancing technologies, evolving customer expectations and a changing regulatory landscape are opening doors to disruptive innovation in financial services. From crypto-currencies to big data to peer-to-peer lending, fintech innovations have captured the attention and imagination of customers, investors and incumbents.
However, the nature and extent of the impact that these innovations will have on the financial services industry remains unclear. This document captures the results of a series of multi-stakeholder dialogues that explored the potential for these innovations to transform the financial ecosystem as well as the risks and opportunities that could emerge from changes in the way financial services are structured, delivered and consumed in the future in the future.
In investment management for instance,
so-called "robo-advisors" have begun to automate wealth advisory
functions, calling into question face-to-face relationships and proprietary
distribution channels.
Fintech companies are deploying online
platforms, have small capital bases and make strategic use of data to acquire
customers and revenues at a fast pace,
Rising investments in fintech start-ups
globally are helping fuel the challenge to entrenched players, with $12.2
billion ploughed into the fintech sector last year, more than threefold the
total of 2013, the report noted.
Bankers who once thought financial
regulation was a barrier to new entrants are seeing non-bank fintech rivals go
after the most profitable areas of their business, while avoiding regulated
markets.
Meanwhile the plethora of lending
platforms will likely make it harder for banks and credit scoring companies to
get an accurate view of people's creditworthiness.
You can
read a short executive summary here :
You can
download the full report here.
