Well, not any more. FinTech disruptors have the financial services industry. We identified been finding a way in. Disruptors are fast- several thousand companies that are new moving companies, often start-ups, focused market entrants to various components on a particular innovative technology or of these chains. Here is what we have seen process in everything from mobile payments so far: to insurance. And, they have been attacking • Successful disruptors typically offer a some of the most profitable elements of the better customer experience and greater financial services value chain. This has been convenience at a much lower price. particularly damaging to the incumbents who have historically subsidised important • The effects of disruptors vary significantly but less profitable service offerings. In our across countries and value chains, largely recent PwC Global FinTech Survey, industry because of differences in regulatory respondents told us that a quarter of their barriers and the robustness of local business, or more, could be at risk of being FinTech ecosystems. lost to standalone FinTech companies within five years.7 • Regulatory authorities are caught Global investments in FinTech more than between wanting to encourage tripled in 2014, reaching more than $12 competition and innovation and wanting billion. In comparison, banks spent an to provide meaningful oversight of these estimated $215 billion on IT worldwide in disruptors. 2014, including hardware, software, and Despite regulation and other potential 8 This is a internal and external services. barriers to entry, we see tremendous demand 81% material number, and because it is so highly for FinTech-related services in areas such as targeted, the FinTech spending will really consumer banking and wealth management. of banking CEOs are concerned about the speed of technological change, 10 make an impact. This will open up new opportunities for both more than any other industry sector. A cast of thousands (of start-ups) incumbents and disruptors. For example, PwC created a tool to allow ourselves (and consider the rise of ‘robo-investing platforms’ others) to analyse the size and complexity of offered by both online-only and traditional the challenge to incumbents and the speed wealth management companies. New players Œ ‚wƒ ‡lobal inech urve 21€ are using the online-only model to reach Ž http://www.banktech.com/management-strategies/ 9 bank-it-spend-projected-to-reach-‘21-billion-in- of change facing the industry. Our online millennials and increasingly other segments platform, which we call DeNovo, defines 21/d/d-id/12…€€’ approximately 40 different value chains for too. Meanwhile, traditional players are … http://www.strateg and.pwc.com/denovo employing this approach to significantly 1 ‚wƒ’s 1…th †nnual ‡lobal ƒˆ‰ urve PwC inancial ervices echnolog 22 and e ond 9
Financial Services Technology 2020 and Beyond PwC Page 8 Page 10