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Global FinTech Report 2019

PwC Global | Oct 15, 2019

2019 global fintech report 1 - Global FinTech Report 2019Crossing the lines: How fintech is propelling Financial Services and Technology, Media, and Telecommunications firms out of their lanes

The lines between financial services (FS) and technology, media and telecommunications (TMT) firms have blurred to the point that the roads are a free-for-all and previously distinct sectors are colliding.

Many TMT companies are applying for FS licences, and FS organisations have begun calling themselves technology companies. Fintech, or financial technology, is at the epicentre of this transformation.

Technology transformation

The FS and TMT industries are both using it to sharpen operational efficiency, lower costs, improve customer experience and heighten the appeal of their products and services.

They’re also carving out new commercial possibilities. Digital-only banks are offering redesigned client propositions and cost profiles. Investment managers are deploying fully customised robo-advice. Insurers are using sensors to monitor people’s health and help prevent illness. And according to a recent PwC survey, consumers are ready for the digital shake-up. The question is no longer whether fintech will transform FS, but which firms will apply it best and emerge as leaders.

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In this year’s Global Fintech Survey, we polled more than 500 FS and TMT executives worldwide and analysed their responses. We think the winning companies will be those that not only embrace fintech-driven business models but figure out how to navigate wider and more crowded lanes with approaches that make the most of FS and TMT’s combined strengths. This report will explore the current fintech landscape, the factors that will determine the likely winners and losers in coming years, and the steps that organisations can take to put themselves in the best position to lead.

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“The really big changes have to be top-down. They have to be strategic. They have to be something that leadership, the board, and the executives are closely involved in and have decided the organisation needs to pursue.”

John Garvey, Global Financial Services Leader, PwC US

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“In China, convergence is gathering pace. At the top of the market, we’ve even seen regulators seeking to match up the big four TMT firms with the big four banks and get them to work together — you could call it an arranged marriage. The TMT firm provides the tech-enablement and the FS firm delivers the end product.”

Wilson Chow, Global Technology, Media and Telecommunications Leader, PwC China

How to position your firm for success

As gaps between leaders and laggards grow, FS and TMT businesses need to move quickly if they’re going to capitalise on fintech’s potential and avoid being marginalised.Recognising the different starting points and what is likely to be a triangular play among TMT, fintech and established FS companies, here’s how firms can get up to speed across four key growth areas: digital, workforce transformation, deals and risk and regulation.

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Digital Priorities:
  • Digital advances have the potential to revolutionise capabilities and open up new markets. Robo-advice, for instance, highlights the evolving customer offer because it paves the way for customised investment solutions for mass-market consumers that used to be available only to high-net-worth clients.
  • Capitalising on these and other fintech-enabled commercial openings requires the ability to leverage technology in new, personalised and real-time offers.
  • Success also demands a clear understanding of customer expectations. Customers need to trust the technology, think that it offers better value for their money than current products and services, and believe that the institution will use their data responsibly.
Workforce transformation Priorities:
  • The workforce is as important as technology in staying relevant. People, not systems, drive innovation. As industry boundaries disappear, it’s important to reach beyond traditional sources of recruitment when filling roles. For FS, this includes gaining access to agile, digital-ready employees within TMT and fintech organisations. Almost three-quarters of FS executives in our survey said they are looking to the technology industry to access engineering, data analytics and other key skills they need to develop and implement fintech.
  • Just as important as finding the right external employees is upskilling within your business. Organisations that pull ahead of the competition will be those that foster a fintech mind-set within their business, for instance by pushing for data-driven decision making.
  • Incorporation of fintech also presents an opportunity to take down siloes and facilitate the flow of data throughout the organisation. This is critical in today ́s data-enabled world.

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Deals Priorities:
  • For FS, access to fintech talent, tech and innovative potential through collaboration or full acquisition could be especially important in improving the stickiness of customer relationships, especially when coming into direct competition with the digitally intuitive capabilities of TMT.
  • For fintech firms, joint venture or sale is an opportunity to apply their innovations on a much bigger scale and gain access to the openings created by an established brand.
  • For TMT, the benefits of converging include access to customers, infrastructure, markets, operating licences and regulatory expertise.
  • The most significant development could be a megadeal initiated by a big tech group looking to compete with potentially slower and less innovative traditional businesses in FS markets that it sees as ripe for disruption.

Risk and regulation Priorities:

  • When asked about the impact of regulation, TMT executives said their biggest concern was how it would affect their ability to develop and capitalise on new business models. The clear priority, therefore, is meeting regulatory expectations while sustaining innovation, personalisation and customer appeal.

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