The evolving world of fintech and its amazing benefits

  • Fintech entrepreneurs eliminating barriers to payment is increasing economic activity and enabling fresh wealth creation
  • Digitally savvy consumers expect novel technologies such as cryptocurrencies, blockchain technology, tokenisation and peer-to-peer networks, forcing a change in a vast and well-established ecosystem
  • The system currently in place to send and receive money will likely change completely by 2030
  • Making a payment would be just a tap away and made easier (just one gateway) via a mobile phone or watch. Payments would also be highly secured, without the need for a PIN/passcode, and available across the globe
  • The capital markets landscape has changed due to the number of new technologies, and hundreds of startups are leveraging these enhanced technologies to overcome the inefficiencies in the investment banking system
  • The biggest banks are investing in rather than ignoring these changes
  • Since 2012, the top 10 US banks (by assets) have participated in 72 rounds of funding, investing USD3.6bn in 56 fintech companies
  • In Europe, Banco Santander has provided a maximum of unique investments to fintech startups, making 13 investments in 12 startups. Its largest investment was USD135m in 3Q 2015 in Kabbage, a small business lender. The funding round included the participation of the ING Group
  • Investment banks are likely to become more flexible and reduce costs by consolidating processes
  • AI and analytics would support resources and intellectual property in the front office, so as to serve clients better
  • A highly automated and largely externalised blockchain-enabled back office will likely support best-in-class trading platforms
  • Investment banking channels will likely incorporate B2B platforms and marketplaces as these evolve in the real economy. Collaboration will play a pivotal role, even between competitors, as the white labelling of services becomes more common, with the industry eliminating the duplication of costs in favour of a smarter approach
  • Today’s investment banks are unlikely to shift to this model instantly. However, it is beneficial that they do so soon, as their ROE could otherwise decline in the coming years

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/