The world of financial services is changing. The recent introduction of FinTech innovations is beginning to shake up the market and improve and streamline financial services and disrupt the order of things. Furthermore, today’s generation of customers have very different habits and requirements and insurance companies, banks, currencies, payment services and financial advising will all have to change if they are to remain relevant to the coming generations.
Incumbent players in the industry are listening however and many have implemented significant changes to their business models in order to adapt for the future. For instance; Block Chain technology has shown itself to have a great number of potential uses and banks want it for their own. Cashless societies are moving closer to reality and in certain countries, people are finding carrying cash increasingly irrelevant. Cybercrime is now big business and protecting customers from attack is now expensive and difficult. For its part, the stale insurance market has been using new technologies to break the mould and robo-advisors are becoming the norm in the wealth management industry.
Key Questions Answered
- What is cryptocurrency and why are banks spending so heavily in developing their own types of blockchains?
- Just how far has the idea of a cashless society spread and what the factors effecting its adoption?
- What is the financial services industry doing to counter the highly dangerous threat from cyber-crime?
- Just how has new technology been able to revitalize certain areas of the insurance industry?
- What are robo advisors and how are they helping to shake up the wealth management industry?
Scope
The rise of cryptocurrencies is due in the main to the clever technology that allows it to function as a kind of distributed ledger system, called the Block Chain. Many in financial services have been skeptical of cryptocurrencies; seeing their trading volatility and resistance to normal financial regulation in a dim light. However, whilst spurning cryptocurrencies, the financial services industry has woken up to the potential of the Block Chain technology. The Block Chain is effectively a far superior and safe database to any current systems that can be altered in multiple places at once across country borders and markets and can work for many more things than just money alone.
The cashless economy has been a longstanding ambition of the financial services industry. Now changes in culture towards the use of digital money for everyday purposes, even tiny purchases, and innovative technology, have allowed countries such as Sweden to move very close to a cashless society. Innovation in transactions and banking has spread efforts to grow the cashless economy to the developing world, ensuring the move away from hard currency is likely to become a global affair. Problems, of course, remain and must be overcome to ensure concerns regarding change are addressed.
Robo-advisors are a new category of financial service product that can offer some unique benefits to those interested in wealth management services. From start-ups to the biggest incumbent players, most institutions in the wealth management industry have their own services. Companies offering these products are capturing the desire for cheaper monthly rates, advice more heavily based on mathematics and fully impartial advice. Essentially what these companies are trying to provide, or what is the long term aim of this type of product, is an AI wealth management service and the robo-advisor market today is a kind of halfway house between a traditional human advisor and what will eventually be the norm, when full AI tools role out in the future.
Reasons to buy
- Examining the changing implications of new Fintech coming in to the FS market.
- Looking at the disruptive forces in the payments, cryptocurrency, blockchain, cyber crime and insurance world.
- Learn whether the hype surround these new innovations are justified and just what impact they might have.
Table of Contents
Table of Contents
Executive Summary 2
Block Chain and Cryptocurrency: Financial markets racing to adopt tech 2
Cashless economy spreading as culture shifts and technology ...
Table of Contents
Executive Summary 2
Block Chain and Cryptocurrency: Financial markets racing to adopt tech 2
Cashless economy spreading as culture shifts and technology solves problems 2
Financial services developing to counter cyber-crime threats 2
Insurance market set for rapid change after embracing technology 2
Robo-Advisors: Complex algorithms and AI are proving popular in wealth management 3
Block Chain and Cryptocurrency: Financial markets racing to adopt the tech 8
Block Chain is the potential foundation of a more secure internet ledger system 8
Block Chain operates like a network file that everyone can access 9
Cryptocurrency mining is an entirely new industry that runs the Block Chain 10
Currency value allows it to escape all bank charges currently 10
Cryptocurrencies Bitcoin and Ethereum are very different enterprises 11
Banks have to solve a particular problem with Block Chain tech 12
R3 is one of the start-ups hoping to woo the big banks 12
IBM is building a Block Chain network for European banks 12
Cashless economy spreading as culture shifts and technology solves problems 14
World leader Sweden developing society around an absence of cash 14
Success of cashless systems in developing countries represents opportunity for financial services 15
Potential gains for banks from cashless transactions are substantial but questions remain on appetite from businesses 17
Transition to cashless society comes with problems and resistance from end-users 18
Financial services developing to counter cyber-crime threats 20
Companies must change to meet evolving cybersecurity environment 20
Regulatory authorities responding to criminality, forcing companies to act 21
Major banks are improving fraud detection, reducing risk to all concerned 22
Regulatory technology is changing how financial services combat criminal threats 24
Insurance market set for rapid change after embracing technology 26
InsurTech is changing the insurance market, allowing disruptors to impart much needed dynamism 26
Big data is changing how insurers do business, allowing better fraud detection and tailoring policies to individual consumers 27
Insurance protecting against cyber-attacks is a major growth area but uncertainty remains 28
Micro insurance opens up markets to new products created specifically for developing economies 30
Robo-Advisors: Complex algorithms and AI are proving popular in wealth management 32
Robo-advisor products are those which include some element of automation 32
Incumbents and startup players prefer different types of products 33
D2C advisory platforms are the main route that start-ups are using, but incumbents still dominate 33
Business-to-business advisory services act as a supplemental product 33
Hybrid advisory services are mainly run by the incumbent big players 34
Robo advisor products are currently flourishing in developed markets with the US leading the way 34
Much of the product offering is generally poor and lacking in depth 34
Restricted advice may mean that ultimately the service is worse 35
Robo advising may actually be a misnomer, customers are expecting an AI product 35
Robo advising and digital wealth can’t be ignored because some people prefer it 36
Points of interest 37
Appendix 38
Sources 38
Further Reading 38
Ask the analyst 39
About MarketLine 39
Disclaimer 39
List of Tables
List of Tables
Table 1: POS transactions per card at terminals provided by resident PSPs 2011-2016 14
Table 2: Main reasons and business benefits of ...
List of Tables
Table 1: POS transactions per card at terminals provided by resident PSPs 2011-2016 14
Table 2: Main reasons and business benefits of using big data in OECD countries, 2015 27
Table 3: Types of investor reaction to robo investing 35
List of Figures
List of Figures
Figure 1: Ethereum uses a distributed shared network 8
Figure 2: Average number of daily bitcoin transactions 2009-2017 9
Figure 3: Types ...
List of Figures
Figure 1: Ethereum uses a distributed shared network 8
Figure 2: Average number of daily bitcoin transactions 2009-2017 9
Figure 3: Types of Block Chain networks 11
Figure 4: IBM Block Chain features compared with Ethereum and Bitcoin 12
Figure 5: M-Pesa revenues 2012-2016 (KESbn) 15
Figure 6: M-Pesa outlet in Nairobi, Kenya 16
Figure 7: Number of credit cards in China, 2006-2014 (million) 17
Figure 8: Value of payment transactions per card, Germany 2011-2016 ($) 19
Figure 9: Value of banking market in Asia-Pacific ($tn) 2009-2016 20
Figure 10: Number of ‘card not present’ fraud in United Kingdom 2011-2016 22
Figure 11: Global willingness to use a digital only bank, 2016 23
Figure 12: Timeline of Regtech developments March 2015 to March 2016 24
Figure 13: Lemonade policies taken by age group September 212016 to January 18 2017 26
Figure 14: Value of global non-life insurance 2010-2016 ($tn) 29
Figure 15: Use of micro insurance by country in East Africa 2014 (% of population) 30
Figure 16: Robo-advisors are replacing the traditional advisor role 32
Figure 17: Top global Robo-advisor firms 33
Figure 18: Geographic distribution of robo-advisors and number in 2017 34
Figure 19: Mature investors preferred method of advisor versus that of millennials 36