Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services (Deloitte)

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The Fintech Solution: Fact or Fiction?

Fintech image

The term “fintech” has taken on new meanings amid the constantly evolving landscape for financial institutions. On one hand, finance technologies have impacted how quickly financial services will change and what such changes might look like. On the other hand, they have fallen short when it comes to scalable solutions strong enough to alter customer loyalties. Still, many existing firms have invested in, taken note from, or partnered with emerging fintech solution providers.

Deloitte highlights eight factors that will define the landscape of financial services moving forward.

  1. Cost Commoditization – Financial institutions will counter a lower barrier to entry by differentiating their expense bases. Utilizing automation solutions to reduce expenses and expand the utility of a product (or simply create a utility altogether) aims at reducing solution redundancy and, subsequently, direct competition.
  2. Profit Redistribution – Many intermediaries are finding themselves on the outside looking in. Customers and businesses alike have become increasingly able (and willing) to subvert traditional value chains by interacting directly with suppliers.
  3. Experience Ownership – Many large firms now have direct access to customers as a distributor. This allows them to control more space that the customer interacts with. This will force product manufacturers to become their own distributor so as not to be victimized by lack of visibility. Deloitte cites the Apple App Store as an example of how an institution (Apple) leverages its position as a gateway (distributor) to product manufacturers.
  4. Platforms Rising –  Platforms will consolidate their functions to include financial services. This will allow product creators to become their own distributors and existing platforms to enter the financial services market by hosting and managing finance products.
  5. Data Monetization – More engagement = more data. Platforms such as Facebook will increasingly partner with financial institutions for mutual benefit. Platform owners will gain business partners for increased revenues, and financial institutions will have access to new data and insights.
  6. Bionic Workforce – Talent will take on new meaning as artificial intelligence (AI) develops and expands. Companies continue to invest in AI and will look for new ways to augment productivity by combining human know-how with machine capabilities.
  7. Systemically Important Techs – Solutions like cloud storage, AI, and blockchain require overhauls in technology infrastructure. To keep pace, financial institutions will become dependent on large tech companies. This provides new opportunities for both sides, but undermines control for institutions and puts tech companies at risks for talent poaching.
  8. Financial Regionalization – Not every finance solution works in all areas of the world. Fintechs will focus on developing regional strategies, and similar problems will be met differently depending on the location. Increased partnership between financial institutions and fintechs will become more critical than ever to facilitate maximum global coverage.


Read the full report “Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services” here.