Which emerging technologies have the greatest transformative potential for the fintech sector?
We have been talking about the application of big data, AI and distributed ledger technology to financial services for some time. In many areas we are reaching tipping points where these technologies will become pervasive. Combining real-time data flows and advanced analytics that leverage AI and machine learning has the potential to transform personal and institutional financial services. Both capabilities have so far been adopted largely as point solutions; by putting them at the heart of a financial organization it is possible to open fundamentally new business models that are truly transformative. From the perspective of enterprise, DLT and the resulting operational advances from straight-through processing and elimination of reconciliation offers great untapped potential that will depend on the large-scale platform fintech businesses offering compelling network effects to offset the costs of adoption.
The crisis and shift to remote working have heightened cybersecurity concerns; what does this mean for fintech going forward?
Cybersecurity is of critical importance to all financial services firms, and the recent changes have only heightened focus on this space. A less explored area where we believe fintech has potential is on the insurance side of cybersecurity. Being able to more accurately predict, size and transfer the risk of systemic cybersecurity events is a structural need that fintech can help to address.
Which sub-sectors offer the most interesting prospects in the near- to medium-term?
Our focus is on infrastructure-like technology businesses that have the capacity to scale and offer the business services and insights needed to drive transformation within financial services. Within this space we see a lot to be excited about. The current climate is accelerating the shift to a more digital financial services industry, with greater personalization for the individual and greater efficiency for enterprise. We are exploring exciting prospects that fit within this trend, running from next-generation core banking technologies, through to capital markets platforms offering straight-through processing and end-to-end transaction lifecycle management.
What do you expect the industry to look like by 2030?
The value of data monetization and business facilitation derived from large-scale platform businesses has been more than proven over the prior decade. Indeed, the world’s most valuable companies are such big tech platforms. By 2030 we believe more fintech platforms will join that roster. The consumer will look for a solution to their problem, not a particular product. The well-defined platform will deliver that solution, which will be far more important than the particular wrapper of insurance or wealth management. The traditional verticals across the industry will begin to blur, and scale and ability to access and process data will be increasingly essential. Individual data sovereignty and privacy protection will also likely be a feature of winning financial services platforms.