2. PwC
What are the forces driving FinTech?
• Customer Experience and
Loyalty-Based Relationship
Refinement of the frontlines
• Customised On-Demand
Products/Services
Personalised experience based on
data
• Individual Accessibility
(Anywhere, Anytime, Right Now)
Omni-channel strategies that revolve
around mobile
Customers expect:
FinTech start-up activity is unprecedented, well-funded, pervasive, and solution oriented. The result is a new
competitive landscape and playing field.
Innovation
New tech-enabled
disruptive
start-ups bring
innovative
business models
Funding
Heavily invested by
VCs & PEs given
low interest rate
environment
Market
Penetration
Pervasive in
almost every part
of incumbents
existing value
chain
Product
lifecycle
Short time interval
from concept to
product MVP
Customer
Impact
Leads to
completely new
customer
expectation focused
on experience
Regulatory
impact
Not clearly owned
within regulatory
structures
Mobile is a key enabler
3. PwC
Our Global FinTech Survey
Over 500 senior FS and FinTech executives from more than 45 countries
56%
10%
10%
4%
20%
Origin of participants
Europe
Latin America
North America
Africa
Asia
30%
21%20%
14%
11%
4%
Types of companies
Bank
Asset & Wealth Management company
FinTech company
Insurance company
Other
Fund Transfer and Payments institution
23%
23%
11%
10%
10%
7%
7%
4%
2% 2%1%
Type of respondents
CEO/Board Other
Head of IT/Digital/Tech Directors/Head of department
CFO Head of Innovation
Head of Strategy COO
CRO/Risk manager Head of Products
CDO/Business development
4. PwC
Trends reshaping the Financial Sector
Key Focus Areas
Mobile smartphone adoption is one
of the drivers of changing
payments patterns
Payments
Banks are going for a renewed
digital customer experience and
changing regulations like PSD2 are
driving the era of open APIs
Banking
Insurers leverage data and analytics
to bring personalised value
propositions while proactively
managing risk
Insurance
Asset & wealth management shifts
from technology enabled human
advice to human supported
technology driven advice
AM
&WM
• Advanced tools and technology to protect
consumers
• Push for faster payments
• Digital wallet adoption
FinTech trends that FIs
are prioritising
• Integrate solutions to improve and simplify
operations
• Move toward nonphysical or virtual channels
• Streamline product application to improve UX
• Self-directed services
• Usage based insurance (pay as you go)
• Remote access and data capture
• Increased sophistication of data analytics
• Automation of asset allocation and how
wealth is managed
• Shift from tech-enabled human relationship
to digital experience with human support
5. PwC
Where traditional financial institutions have failed, FinTechs are
succeeding
Customer-centricity
• While 53% of financial
institutions believe that they
are fully customer-centric,
this share exceeds 80%
for FinTech respondents
• 75% believe that the most
important impact FinTech
will have on their businesses
is an increased focus on
the customer…more than 60% of their clients will be using mobile applications
(at least once s month) to access financial services
Source: PwC Global FinTech Survey 2016
Digital is the new
normal for customers
61%Believe that over the
next five years…
6. PwC
Disintermediation: FinTech’s most powerful weapon
Most disrupted sectors
• Consumer banking (73%)
• Fund transfer and payment (55%)
• A majority of AM firms and insurance undertakings
also see their respective sectors as the most disrupted
ones
Will financial institutions
be disrupted?
Yes
83%
Of survey participants that part of their
business is a risk of being lost to stand-
alone FinTech companies
Source: PwC Global FinTech Surney 2016
7. PwC
Time to get off the bench: over 20% of FS business at risk to FinTechs
Business at risk of being lost to standalone FinTechs
Main Threats
Pressure on
margins67% Loss of market
shares59% Info. Security/
privacy threat56% Increase of
customer churn53%
Source: PwC Global FinTech Surney 2016
Up to 28%
of business
at risk by
2020
Up to 22%
of business
at risk by
2020
Banking
and
Payments
Insurance
Asset Management
& Wealth
Management
8. PwC
Blockchain, an untapped technology
is rewriting the FS rulebook
At a very high level, the blockchain is a
decentralised ledger, or list, of all
transactions across a peer-to-peer
network. This is the technology underlying
Bitcoin and other cryptocurrencies, and it
has the potential to disrupt a wide variety
of business processes.
83% are not very familiar
with the blockchain technology
Is the impact
of blockchain
technology taken
into account?
56%
57%
of survey respondents
recognise its importance,
but…
Say they are unsure
about or unlikely
to respond to
this trend
9. PwC
FinTech is altering the economics of financial services
Cost reduction
Differentiation
Improved customer
retention
73%
62%
57%
Fintech is slashing costs and improving
service delivery
Our survey respondents said that key
opportunities existed in
10. PwC
More than two third of participants already engaged with FinTechs:
• 32% through joint-relationships
• 22% bought their services
FS must leverage the FinTech ecosystem
• 15% incubate them
• 9% acquired them
Top 3 challegnes for traditional financial companies and FinTech
companies when working together
TRADITIONAL
FINANCIAL
COMPANIES
FINTECH
COMPANIES
DIFFERENCES IN BUSINESS MODELS 40%
REGULATORY UNCERTAINTY 49%
IT SECURITY 53%
REGULATORY UNCERTAINTY 43%
DIFFERENCES IN OPERATIONAL PROCESSES 47%
DIFFERENCES IN MANAGEMENT & CULTURE 54%
Source: PwC Global FinTech Surney 2016
Editor's Notes
Banking: renewed customer experience is about trying to build stickiness and loyalty through the digital medium where there is no longer person to person contact.
Insurance: the driver of the innovation in insurance is largely due to innovations outside of insurance (e.g. IOT creating a wired home and car, sensors available to track crop yields and physical environment.
Customer behaviours are at the forefront of the FinTech revolution, as our survey demonstrates. While consumers are rapidly adopting new technologies in their day-to-day lives, traditional FS companies are lagging behind. Larger, more
traditional FIs are encumbered with complex development processes, wariness about regulation and legacy systems. Meanwhile, FinTechs are using lean, agile methods of product development and innovation to respond to customers’
emerging needs.
FinTech is a global phenomenon, challenging the orthodoxy of domestic models of banking and insurance, and reinventing the customer experience in the FS sector. Furthermore, FinTech is serving millions of previously under-served consumers with redefined and innovative solutions.
Blockchain shows huge potential and it will have a profound effect on the FS industry. However, it is being seriously underestimated. Knowledge of and ability to react to the blockchain technology is worryingly low.
83% are not very familiar with blockchain
In addition, while a majority of respondents (56%) recognises its importance, 57% say they are unsure or unlikely to respond to this trend.
FinTech is already producing new and alternative business models. It is a fundamental challenge to regulators as well as traditional FIs. The model of FIs owning and controlling almost all parts of their value chain is coming to an end.
These organisations will need to move toward the centre of the FinTech ecosystem by leveraging their trusted relationships with customers and their extensive access to client data.
This will involve a shift that may present unique challenges, be it in a firm’s culture that resists outside influences, a company’s infrastructure which cannot accommodate new technologies, or forces from the outside, like laws and
regulations which stymy progress.
