MOSCOW (Sputnik) — The report, entitled Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services, was prepared in collaboration with the Deloitte consulting firm. The document contains attempts to analyze the influence of innovation on the current environment of financial markets.
"The challenge to banks and insurers is down to large technology firms hollowing out the value proposition of these institutions by carrying out more core functions, even as banks and insurers lean ever more heavily on them to compete … Fintech startups, while achieving success in terms of changing the basis for competition, have had less impact than expected in disrupting the competitive landscape," the press release accompanying the report said.
Many banks and insurers partner with large tech firms since the latter have far more expertise in cloud computing, customer-facing artificial intelligence and "big data" customer analytics, all three of which are critical to financial institutions. Such cooperation might lead to direct competition between current banking and insurance market players, and large technology companies, according to the report.
"Tech giants would be able to pick and choose their points of entry into financial services; maximizing their strengths like rich data sets and strong brands, while taking advantage of incumbent institutions’ dependence on them," Jesse McWaters, lead author of the study, said as quoted in the press release.
Therefore, financial firms might end up blade-running between earning money from collaboration with tech firms' services and becoming ultimately dependent on them.
