FinTech is an inevitable outcome of broader trends in technology and treasurers will see banks adapt accordingly
It’s important to see FinTech as just one of a many technology trends impacting on organizations and individuals all around the world – indeed, FinTech is a natural endpoint for these trends. They include:
- Soaring customer & employee expectations: having become used to high-quality functionality and user experience on their personal smartphones – they have much higher expectations of financial services IT solutions
- The shift to digital: the ability of technologists to digitalise business processes has increased exponentially
- Cloud proliferates: cloud computing is increasingly the default option for many organizations, offering scalability, greater speed and agility, and potentially superior security
- Next-generation software development: organizations are no longer making large, one-off IT upgrades, opting instead for almost continuous incremental change
- Data and analytics: technologies that capture, store, manage and analyse huge and diverse datasets to generate actionable insight are increasingly accessible
- Cyber security is a differentiator: organizations’ ability to protect customers and other stakeholders is key
Treasurers expect to be impacted by FinTech in a variety of ways. As our Pre-Forum Survey shows, almost two-thirds anticipating their banks working together with FinTechs to provide services. More than a fifth expect banks to acquire FinTechs.
The financial services sector is ripe for disruption
The goal of a FinTech is very often to identify one distinct service offered by financial services companies and then to do it better; in aggregate, however, FinTechs are now improving on almost every service the sector offers. This will continue, courtesy of the technology drivers above, as well as continuing venture capital backing for disruptors, the desire of financial services companies themselves to encourage innovation, and the rise of tech-savvy millennials.
FinTech delivers on common tests
Different FinTech players are succeeding because they meet similar tests: they’re often simple and single-purpose, they deliver convenient and automated services that make people’s lives easier, they use data to deliver personalization and their business models are often low cost and scalable
Collaboration often suits FinTechs and incumbents
While FinTechs were once thought of as potentially replacing financial services incumbents, their model is increasingly to work with the sector. This suits both sides: as FinTechs grow, they may need help coping with the demands of the regulatory system, access to capital and support in customer acquisition; for the incumbents, meanwhile, FinTechs offer access to innovation that can underpin improvements in their own business model.
FinTech is having an impact on wholesale as well as retail
While it is consumer-focused FinTechs that are most visible, many start-ups are focused on the wholesale space, including areas that may have a direct impact on the activities of treasurers. Advances in distributed ledger – or blockchain – technologies are a good example. Just as FinTechs collectively offer everything available from retail banks, so too will they replicate the wholesale offer – and improve it, as they collaborate with incumbents.
How J.P. Morgan is collaborating with FinTechs: In-Residence Program and Quorum
J.P. Morgan takes an open, transparent, and highly collaborative approach to developing solutions that will yield enduring value for the entire financial industry. Through the highly specialized In-Residence program, we build partnerships with the best and brightest to co-create solutions to wholesale banking and capital markets challenges. True innovation requires open collaboration and deep access to knowledge and technology. Combining innovators who are exploring the edges of what is possible with the unique resources of a global bank can accomplish this innovation. The program provides access to the heart of J.P. Morgan's internal business and technology ecosystem, giving teams and companies the best chance to create viable and transferable solutions that have value to not just J.P. Morgan, but the financial industry as a whole.
Another key initiative is QuorumTM which addresses specific challenges to blockchain technology adoption within the financial industry, and beyond.