According to PwC Global Fintech Report 2017, fintech companies will continue driving the market changes by focusing on emerging technologies that will provide renewed experience to customers. Incumbents are also expected to adapt to the market and focus on these technologies, therefore, moving closer to fintech. The fintech report identifies the following as the trends that will shape the fintech industry in 2018.
Asset and Wealth Management Companies to Invest More in Technology
Asset and wealth management companies have been rather complacent to take full advantage of fintech disruption. Nevertheless, they are aware of the disruption in the industry. Indeed, 41 percent of them believe that their customers are already conducting business with fintech companies. Similarly, 60 percent believe that wealth management activities are at risk of moving to a fintech company. Asset and wealth management companies will invest in technologies that will improve operational efficiency, increase innovation in research tools, increase analytical capacities and improve decision making.
Consumer Banking to Continue Being the Centre of Disruption
Consumer banking will continue to be the epicenter of disruption in 2018 and beyond. Up to 64 percent of bankers see personal loans as being at the risk of moving to a fintech company. The ease of use, intuitive product design, 24/7 accessibility and faster services will be the focus areas in an attempt to retain customers. Banks will continue improving their operations through digital solutions. More of them will explore new technologies like blockchain as a third of them are currently in the early stages of evaluating potential partnerships.
More Insurance Companies to Partner with Fintechs
Insurance companies have been accelerating efforts to keep pace with technology in the financial services sector. In fact, 52 percent of insurance companies believe that their industry is the second among those that are at the risk of disruption, only after consumer banking. 58 percent say that they are monitoring fintech companies so as to respond appropriately and competitively. 84 percent will increase partnerships with fintechs over the next three years compared to 45 percent in 2017 and 28 percent in 2016, a significant increase.
Payments Companies to Double Investment in blockchain Technology
Fund transfers and payments are seen as areas where a substantial number of customers are already conducting business with fintechs. 73 percent of the companies in this space are still concerned that their businesses are at risk of being taken by fintechs, though this is a drop from 87 percent who had similar concerns in 2016. Probably, they are beginning to see fintech as an opportunity more than a threat. Nevertheless, more payments companies are expected to invest in data analytics, mobile, cybersecurity and blockchain technology. In fact, 90 percent of payments companies are planning to incorporate blockchain technology in their services by 2020.
Large financial institutions and fintech companies interviewed by PwC fintech report identified the following as the most relevant technology areas to invest in 2018.
- Data analytics
- Mobile money technology
- Artificial intelligence
- Cyber security
- Biometrics and identity management
- Robotics process automation
- Distributed ledger technologies
- Public cloud infrastructure