Intro and Key Technological Trends Affecting Financial Services
Q: What are the major technological trends materially influencing the provision of financial services?
The major technological trends materially influencing the provision of financial services include open banking, natural language processing, digitization of e-commerce, and the use of APIs. These technologies are allowing for more efficient and accessible financial services, such as robotic advisors, mobile payments, and improved financial inclusion. Additionally, big tech companies are increasingly entering the financial services space, leapfrogging traditional banking systems in some countries. This is allowing for a more efficient transfer of risk, capital, and advice in the capital markets, as well as transforming the way financial services are provided in multiple sectors, such as commercial banking, asset management, insurance, investment banking, and advisories.
Q: How is the competitive landscape shaping adoption of these new technologies around the globe?
The competitive landscape is shaping adoption of these new technologies around the globe by creating a need for companies to innovate and find new ways to provide services. Companies are competing to provide better user experiences, alternative data, and more efficient ways to manage and fund investments. Companies are also competing to provide zero commission services, robo-advisors, and low-cost asset management funds. In the insurance sector, companies are competing to reduce fees and increase the percentage of premiums that go back to claims. Companies are also competing to provide telematics-based insurance and comparison services, such as Policy Bazaar in India. The coronavirus crisis has also highlighted the need for startups to focus on providing innovative solutions to the challenges posed by the pandemic. All of these competitive forces are driving adoption of these new technologies around the globe.
Q: How are FinTech start-ups and Big Tech firms competing and cooperating with incumbents from big finance? How has Big Finance reacted?
FinTech start-ups and Big Tech firms are competing and cooperating with incumbents from big finance by leveraging open API technology to access data from the incumbents. This data is then used to create new products and services that can be used to disrupt the incumbents’ business models. Companies such as Intuit and Plaid are leveraging data and analytics capabilities to cross-market to customers and enter into contractual arrangements with financial institutions. Big Finance has reacted by trying to protect their business models and reputational and regulatory risks, while the disruptors are more willing to take risks with the regulators. Additionally, Big Finance is also looking to partner with FinTech start-ups and Big Tech firms to leverage their data and analytics capabilities.
Q: What do you wish to achieve in this Fintech course?
In this Fintech course, I wish to gain an understanding of the major technological trends that are materially influencing finance, both in the US and around the world. I also want to gain critical reasoning skills to separate hype from reality, and to gain an understanding of the competitive landscape of the Fintech industry. Additionally, I want to gain an understanding of the strategies that startups, big tech, and incumbents are using in the Fintech sector. Furthermore, I want to gain an understanding of the actors in the Fintech industry, including incumbents, big tech, and disruptors, as well as the sectors and functions of the capital markets, such as commercial banking, asset management, insurance, investment banking, and advisories. Finally, I want to gain an understanding of how technology can transform finance at any given time.