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As the report notes, the success of fintech startups (companies using technologies and innovations to compete with traditional financial institutions) is incomplete. On the one hand, they managed to seize the initiative. They determined direction and pace of innovation in almost all sectors of the financial sector, and changed expectations of customers, setting a higher level of client experience. For example, innovations such as accelerated decision-making on a loan, have demonstrated that Apple and Google’s standards can be transferred to the financial services sector. At the same time, willingness of customers to abandon the services of traditional players has been overestimated, especially when the latter began to adapt to new conditions, the study notes.
Efforts to create a new infrastructure of financial services-alternative payment instruments or capital markets were also unsuccessful: those who improved the traditional environment turned out to be more successful. "For large financial institutions, the ability to quickly copy solutions was more important than the primacy," says Rob Galaski of Deloitte, a co-author of the study. Quickly adapting traditional players used the fintech ecosystem as a "supermarket", choosing solutions and quickly concluding partnerships for themselves. In the future, however, this can do them a disservice.
A real thunderstorm for banks and insurers in the future will not be represented by fintech startups, but by large technology companies. The banking and insurance market turned to them to survive against the changing standards of the industry, the WEF believes. The partnership of banks and technology giants is not equal, says Jesse McWaters, another co-author. "Financial institutions increasingly rely on technology firms in their most strategically important functions, but they can only offer their current business in response," he says. Leadership in cloud computing, customer-oriented artificial intelligence and large data analytics, which WEF the key to the financial industry, belongs to technological giants like Amazon, Google and Facebook. And if traditional financial companies cannot catch up with them or outgame them, they, in turn, can enter into direct competition with banks and insurers, relying on accumulated databases and well-known brands.
Regulators in different countries approach the financial industry in different ways. In China, major technology companies such as Ant Financial (a subsidiary of Alibaba) and Tencent (WeChat’s parent company) have already become leading providers of various financial services, while traditional banks have remained dominant in the US. In Europe, as the second Directive on Payment Services (PSDII) entered into force, banks will have to open client information, which will increase competition between traditional and new players in the market. Such a regionalization of financial systems can create a problem if regulators have to coordinate their efforts in the face of a new financial crisis, the WEF concluded.
source: cnbc.com
Efforts to create a new infrastructure of financial services-alternative payment instruments or capital markets were also unsuccessful: those who improved the traditional environment turned out to be more successful. "For large financial institutions, the ability to quickly copy solutions was more important than the primacy," says Rob Galaski of Deloitte, a co-author of the study. Quickly adapting traditional players used the fintech ecosystem as a "supermarket", choosing solutions and quickly concluding partnerships for themselves. In the future, however, this can do them a disservice.
A real thunderstorm for banks and insurers in the future will not be represented by fintech startups, but by large technology companies. The banking and insurance market turned to them to survive against the changing standards of the industry, the WEF believes. The partnership of banks and technology giants is not equal, says Jesse McWaters, another co-author. "Financial institutions increasingly rely on technology firms in their most strategically important functions, but they can only offer their current business in response," he says. Leadership in cloud computing, customer-oriented artificial intelligence and large data analytics, which WEF the key to the financial industry, belongs to technological giants like Amazon, Google and Facebook. And if traditional financial companies cannot catch up with them or outgame them, they, in turn, can enter into direct competition with banks and insurers, relying on accumulated databases and well-known brands.
Regulators in different countries approach the financial industry in different ways. In China, major technology companies such as Ant Financial (a subsidiary of Alibaba) and Tencent (WeChat’s parent company) have already become leading providers of various financial services, while traditional banks have remained dominant in the US. In Europe, as the second Directive on Payment Services (PSDII) entered into force, banks will have to open client information, which will increase competition between traditional and new players in the market. Such a regionalization of financial systems can create a problem if regulators have to coordinate their efforts in the face of a new financial crisis, the WEF concluded.
source: cnbc.com