Digital Disruption: How FinTech is Forcing Banking to a Tipping Point
Why this matters
The attached report from Citigroup provides an excellent overview of how FinTech is expected to impact banking over the next 10 years. The report (1) identifies where FinTech investments are being made by financial product and client segment; (2) assesses where we are in the Disruption Cycle by segment and geography; (3) takes a deeper look at innovation in each of the key product segments - payments, lending and savings; and (4) assesses what banks can do to improve the efficiency of their businesses, both in terms of current headcount and distribution as well as long-dated options such as Blockchain.
According to the report, American and European banks are now facing what the report calls their “Uber moment”, much like the taxi industry did several years ago.
FinTech companies are going after banks’ most profitable services. Citi says that personal and small and medium enterprise (SME) banking accounts for about half of the banking industry’s profits, and over 70% of the FinTech investments have gone into those segments.
We need to be cognizant of the impact these changes are having on our clients businesses and risk profiles and talking with them about how Marsh can help address those evolving risks.