09 Jul The future of financial services
Rapidly advancing technologies, evolving customer expectations and a changing regulatory landscape are opening doors to disruptive innovation in financial services. From cryptocurrencies 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.
The mandate of this project was to explore the transformative potential of new entrants and innovations on business models in financial services
Three major problems that have prevented a comprehensive understanding of the state of disruptive innovation in the industry:
- There is no common taxonomy or understanding of which innovations are the most relevant
- There is no clear understanding of the evolutionary path of emerging innovations
- The implications of those evolutions on incumbent business models are unclear, creating significant uncertainty for traditional players as they strive to react to growing competitive pressures
Key Research Findings
- Innovation in financial services is deliberate and predictable; incumbent players are most likely to be attacked where the greatest sources of customer friction meet the largest profit pools
- Innovations are having the greatest impact where they employ business models that are platform based, data intensive, and capital light
- The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector
- Incumbent institutions will employ parallel strategies; aggressively competing with new entrants while also leveraging legacy assets to provide those same new entrants with infrastructure and access to services
- Collaboration between regulators, incumbents and new entrants will be required to understand how new innovations alter the risk profile of the industry – positively and negatively
- Disruption will not be a one-time event, rather a continuous pressure to innovate that will shape customer behaviours, business models, and the long-term structure of the financial services industry
Learn more about this research and download the report here
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