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Disruptive Technologies in Financial Services

Disruptive Technologies in Financial Services

The disruption in financial services is breathtaking. A recent survey of the financial services landscape by PwC,1 a global consultancy, identified the top 10 disruptive technologies affecting the financial industry today.

  1. Fintech will drive a new business model.
    While it was once hard to challenge the incumbent financial services companies, the rise of fintech disruptors are placing the traditional players on notice by offering better customer experiences, greater convenience and lower fees. To stay competitive, traditional players will need to improve their technology and service models.
  1. The sharing economy will spread to financial services.
    Much like technology is used today to match people who need a place to sleep with those who have a room or house to rent, banks will look to partner with fintech companies to enable them to compete in peer-to-peer payments, raise funds or make loans.
  1. Blockchain will change everything.
    Blockchain technology will revolutionize financial services in two primary ways. The first is by offering a much more inexpensive infrastructure by removing intermediaries from payments, tax transactions and information storage. The second way is by its sheer breadth of uses, from transferring digital or physical assets and protecting intellectual property to verifying the chain of custody and making the platform highly resistant to fraud.
  1. Digital becomes mainstream.
    The evolution to digital will become complete, extending from the customer experience and operational efficiencies to big data and analytics.
  1. Knowledge of the customer will be key to revenue growth and profitability.
    The prevalence of information—coupled with the ability to tap into it and connect the dots—will allow financial firms to better understand customer behavior and needs, which will drive earnings.
  1. Robots and AI will lead to reshoring and localization.
    The repetitive, low-value tasks that were shipped to developing nations will return as they begin to be performed by robots and AI platforms. Their use will not, however, be limited to rote activities, but extend to—among other tasks—product design, money management and fraud prevention.
  1. The public cloud will become the predominant infrastructure.
    While non-core activities, such as HR and CRM, may already be cloud-based, expect more core functions to move to the cloud, including areas such as consumer payments.
  1. Cybersecurity will emerge as a top risk.
    Increased use of IoT (Internet of Things) platforms by consumers will introduce new cybersecurity risks, requiring an even higher level of focus on preventing hacking and other cybersecurity threats.
  1. Asia emerges as a center of technology-driven innovation.
    Investments in research and development by western companies in Asian hubs will accelerate fintech innovation in Asia.
  1. Regulators turn to technology to do their job.
    Regulators are increasingly adopting technology to stay abreast of a more complex business environment, with the goal of predicting problems rather than simply reacting to them.

Technology is ever-changing, and industries and business models need to evolve along with it in order to stay relevant.  Keeping abreast of disruptive technologies can help in this journey.


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