Financial services based on innovative technology are set to become the ‘new normal’, according to a study by Juniper Research.
Fintech Futures: Leading Innovators, Segment Analysis & Regional Readiness 2019-2024 predicts that financial technology (fintech) platform revenues will reach $638bn (Â£501bn) by 2024, more than doubling from the estimated $263bn (£207bn) in 2019.
Technologies such as machine learning, big data analytics and blockchain will be the cornerstone of fintech platforms and will fundamentally alter the way financial services are delivered, Juniper believes.
New use cases – including smart contracts, loan underwriting using AI to analyse non-traditional data sources, and personalised insurance policies based on IoT-generated data – will become mainstream.
Traditional players are responding rapidly to the rising consumer acceptance of digital platforms for financial services, the report says.
In some cases incumbents are replicating fintech firms’ offerings by introducing digital banking offshoots or new services, such as HSBC’s new online investment service, Wealth Compass. This helps them appeal to a wider range of customers.
Existing firms are also partnering with fintechs. Here, the challenge is to integrate these partnerships in a seamless way, maintaining control of the overall customer journey, Juniper said.
For fintech companies, stricter regulations imposed on financial institutions after the 2008 financial crisis mean that direct entry, beyond partnerships, “remains unlikely in the medium term”, the report notes.
“The distinction between the fintech suppliers and traditional incumbents will blur in the 2020s; digital engagement will become the norm,” commented research author Michael Larner. “The winners will be those that provide personalisation allied to an outstanding customer experience.”
Read our Next-generation connectivity report to learn more about how new technology and next-generation internet connectivity will impact financial services and other sectors.