Beyond Fintech: A pragmatic assessment of disruptive potential in financial services

This report from the World Economic Forum (Forum) and Deloitte studies the transformative role of fintech and other disruptive forces on the financial services industry. This is the third report Deloitte and the Forum have developed on this topic.

The report uncovers eight disruptive forces that have the potential to shift the competitive landscape of the financial ecosystem.

• Cost commoditization: Financial institutions are embracing new technologies to accelerate commoditization of cost drivers.
• Profit redistribution: The location of profit pools within and between value chains are shifting with new technologies.
• Experience ownership: Distributors will enjoy a position of strategic strength as owners of customer experience; manufacturers are expected to become hyper-scaled and hyper-focused.
• Platforms rising: Financial institutions are shifting to multiple-provider platforms as a channel to distribute and trade across geographies.
• Data monetization: Financial institutions are starting to use a combination of data strategies to follow the lead of tech firms in data monetization.
• Bionic workforce: New technologies such as Artificial Intelligence will mean major shifts to financial institutions’ workforces.
• Systemically important techs: Financial institutions of all sizes rely on large tech firms’ capabilities.
• Financial regionalization: Diverging regulatory priorities and customer needs is making way to tailored regional models of financial services.

Read the report to learn how these forces are impacting the financial services industry, including insights from seven industry segments: payments, digital banking, lending, insurance, market infrastructure, investment management, and equity crowdfunding. Please contact us if you would like to discuss the report, and learn what these findings mean for your business.

Learn more about the findings for the following sectors:

Beyond Fintech: Disruptive innovation in payments

Payments are migrating away from cash as consumers shift purchases to online and mobile channels. On one hand, heightened competition and a challenging regulatory environment are leading to steadily declining profits. On the other, customers are reluctant to switch to nontraditional payment schemes without seeing significant benefits, thereby limiting adoption of new technologies. What implications will these trends have on payment businesses?

Beyond Fintech: Disruptive innovation in digital banking

Banking is on the cusp of significant disruption as regulations and technology begin to lay the foundation for a fundamental shift in the business model. Additionally, customers are expecting more value‐driven, personalized, and seamless service than ever before. How will this impact the digital banking landscape?

Beyond Fintech: Disruptive innovation in lending

Lending has greatly evolved over the last several years with fintech playing a significant role in restructuring the lending landscape to be more dynamic and responsive. Fintechs are providing customers with pain-free lending services, and customers want the same unified experience with their banks. Additionally, consumers can choose from a host of financial and non‐financial providers. But, fintechs are struggling to find a sustainable business model in the face of funding instability.

Beyond Fintech: Disruptive innovation in insurance

A rise in the number of insurtechs coupled with external forces is fragmenting insurance value chains, thereby encouraging insurers to seek new partnerships and invest in innovation. Evolving purchasing patterns are forcing insurers to offer flexible, customizable range of products. With the rise of connected insurance and a constant need to monitor customer risk, insurers are challenged to be more proactive than ever.

Beyond Fintech: Disruptive innovation in market infrastructure

Infrastructure underlying capital markets is rapidly changing with the global entry of several innovative forces that have the potential to change how transactions are being conducted. Traditional over-the-counter products are becoming electronic, but are not scaling due to fragmented regulatory and technological environments. In order to scale up and garner success, joint ventures and partnerships between fintechs and incumbents are key.

Beyond Fintech: Disruptive innovation in investment management

Investment management has largely evolved with increasing client expectations and the demand for personalized customer experiences. With automation and service externalization, firms are forced to differentiate on high‐quality, process execution, and tailored advice. Fintech offerings like robo-advisors are enabling incumbents to increase customer stickiness and retain customers.

Beyond Fintech: Disruptive innovation in equity crowdfunding

Equity crowdfunding has greatly evolved over the last several years. Crowdfunding platforms have grown rapidly with the demand from an increasing number of start-ups and private market investors seeking alternatives to venture capital. How will regulation converge to support this growth?