Financial Services Technology 2020 and Beyond: Embracing disruption
Pwc.com | 02/03/2020
A glimpse of what is to come
Let’s say you are a bank executive. Imagine that you are competing against a truly global, multi-service, low-cost, digital bank: customers accessing their accounts through their mobile phones, paying with a tap on their wearables, sweeping savings to an ETF portfolio (designed by an AI (artificial intelligence) engine based on their savings goals and risk appetite profile) offering
no-fee, cross-border payments. Imagine if you faced a competitor bank like this, with a low and nimble footprint, prototyping new services quickly, managing regulatory compliance transparently, using an AI system to limit fraud losses, and hedging currency risk using cryptocurrencies.
This competitor does not exist today. But in the next few years, it is a very real possibility. Now what?
The financial services industry has seen drastic technology-led changes over the past few years. Many executives look to their
IT departments to improve efficiency and facilitate game-changing innovation – while somehow also lowering costs and continuing to support legacy systems. Meanwhile, FinTech start-ups are encroaching upon established markets, leading with customer-friendly solutions developed from the ground up and unencumbered by legacy systems. Customers have had their expectations set by other industries; they are now demanding better services, seamless experiences regardless of channel, and more value for their money. Regulators demand more from the industry too, and have started to adopt new technologies that will revolutionise their ability to collect and analyse information. And the pace of change shows no signs of slowing.
In our latest Global CEO Survey, across all sectors business leaders told us the speed of technological change is one of their biggest concerns. In fact, in financial services, 70% of the leaders told us the speed of change in technology was a concern.6 One factor is that the time it takes to go from breakthrough technology to mass-market application
is collapsing. For example, in the United States, it took the telephone 76 years to be adopted by half the population. By contrast, the smartphone did it in under ten years. We are now watching blockchain move from a notebook sketch to an established technology in a tiny fraction of the time it took for the Internet to be accepted as a standard tool. Indeed, technology-driven change is so pervasive that no financial institution is immune. In Section 2, we address how these and other global megatrends are affecting the financial services industry, with a particular focus on the IT department.
The ten technology forces that matter: how to compete in the financial services industry in 2020 and beyond
1 FinTech will drive the new business model
2 The sharing economy will be embedded in every part of the financial system
3 Blockchain will shake things up
4 Digital becomes mainstream
5 ‘Customer intelligence’ will be the most important predictor of revenue growth and profitability
6 Advances in robotics and AI will start a wave of ‘re-shoring’ and localisation
7 The public cloud will become the dominant infrastructure model
8 Cyber-security will be one of the top risks facing financial institutions
9 Asia will emerge as a key centre of technology-driven innovation
10 Regulators will turn to technology, too
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