Is Big Tech, Not Fintech, Causing The Greatest Disruption To Banking?September 01, 2017 Due Diligence, Reduce Financial Risk
This was explored in a published report last month by the World Economic Forum.
The World Economic Forum, an independent international organization and Swiss non-profit foundation that “engages the foremost political, business and other leaders of society to shape global, regional and industry agendas,” recently published their report Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services (download report pdf here).
The report reached some interesting conclusions regarding the phenomenon of fintech and its impact on the competitive landscape in finance while providing its view of the horizon and beyond. In short, the report concludes in a summary article that it’s Big Tech, not Fintech, causing the greatest disruption to banking. From a World Economic Forum summary of the report:
- Fintech start-ups have fallen short of their ambitions to upend the competitive landscape in finance, driving innovation but failing to capture large market share;
- The competitive landscape in banking and insurance is being shaped increasingly by large technology firms supplying critical technology to the sector, opening the door to direct competition at a later stage;
- Meanwhile, regulatory approaches to financial innovation are diverging in the US, Europe and Asia, potentially jeopardizing the likelihood of a concerted global response in a future financial crisis.
A more concise summary of the report offers more analysis including:
- Our findings suggest that fintechs have materially changed the basis of competition in financial services, but have not yet materially changed the competitive landscape. They play a critical role in defining the pace and direction of innovation across the sector but have struggled to overcome the scale advantages of large financial institutions.
The report culminates three years of research by the World Economic Forum in collaboration with Deloitte into the transformation of financial services and includes a vast list of contributors from various industries and perspectives.
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