For the finance industry, things are indeed becoming more and more difficult. Some would say it is going about things differently, but it appears that the harmonious period of continuous profits has ended. Low-interest rates and additional capital requirements have destroyed the exceptional profitability of local and international banks. Aside from these two culprits, there is another imminent menace that is slowly creeping up in the distance.
Accenture released their most current fintech report last year, and from $4 billion last year, the fintech industry had drawn $12 billion in venture capital investment. Today, these cashed-up companies are focused on radically transforming a sector that has been plagued by high costs and complacency. Goldman Sachs has predicted that the fintech industry could possibly lure $4.7 trillion in revenue as well as $470 billion in profit, taken directly from the industry’s occupants.
Since 2014, the slow deterioration of the consumer’s trust in conventional money makers, and how new technology firms are giving financial services, fintech venture investments have grown by three times.
NAB is the very first, out of the four major banks, to invent a robo-adviser service that gives distinctive advice on insurance and super. It is rivaled by Stockspot, a paperless automated fund manager and investment adviser, created by Chris Brycki, a previous UBS portfolio manager. Stockspot uses algorithms to calculate risks, then designates investors into inexpensive exchange traded funds at a very low-priced amount compared to managed funds.
The government is also joining the bandwagon. With the help of Capgemini, a consulting firm, NSW Self Insurance Corporation has triumphantly utilized a cloud-based system. NSW Self Insurance Corporation is the department that issues NSW homeowners their home warranty protection. Senior Vice-President of Capgemini, Manoj Khera, said that they have received positive feedback from the customers, and that the program has given the company a boost in earnings while at the same time providing the customers a competent alternative.
According to Thierry Delaporte, chief executive of Capgemini in global financial services, disruption is a double-edged sword for the financial services sector. It may pose as a threat to their business models, but it also presents them a chance to profit on their reformist innovation. The banking sector’s misery is the triumph of the IT industry. Delaporte added that during these times when growth is deficient, technologies like robotics, cloud-based computing and the blockchain have given the financial companies brand new alternatives. In some scenarios, the foreboding of disruption has lured a flood of investment from traditional fintech contenders. It has also persuaded some banks to develop their individual contending digital entities to compete with their revolters.