Less than half of financial institutions KPMG spoke to believe that their fintech strategy is well aligned to the current challenges and disruptions. But with disruptive technologies being here to stay, a clear strategy and implementation plan is essential. Are you making the most of fintech’s potential?
From artificial intelligence to machine learning, from the Internet of Things to blockchain, the scope of emerging technologies is broad. They can be used to enhance the efficiency, effectiveness and ability to meet your customers’ expectations. Navigating them, however, requires a clearly defined fintech strategy. And an equally clear implementation plan to deliver it.
Fintech is the biggest disruptor facing financial firms
Our survey of 160 financial institutions from 36 countries cast a fascinating spotlight on approaches to fintech opportunities. Respondents ranked fintech as the biggest disruptor for the finance industry – well ahead of regulatory complexity, new business models or cyber security. Every financial organization needs to be aware of latest developments and which technologies they should already be making use of. But with so many solutions coming to market, knowing which ones can add true value to your organization is difficult.
Making the right choice for your organization
Success requires the same degree of focus and attention that would be given to any other aspect of your business’s strategy. The starting point must be a critical – and brutally honest – assessment of your current fintech status and where you want to be in the future. Ninety percent of our survey respondents have or are developing, a fintech strategy. But less than half of them believe it is well aligned to current challenges and disruptions. Among insurance respondents, this is two-thirds. There is considerable work to be done.
Look along your value chain
Open banking. Customer experience. New payment models. Innovative delivery models. Back office efficiency. The list goes on. It is not an understatement that the entire financial services value chain is being reinvented. This puts the emphasis on management to appraise what they do and how they do it. Fintechs have specialized in mastering specific parts of the value chain in the banking world and bringing an efficient solution for that. Thus unbundling the value chain to determine opportunities through fintech is the need.
Leveraging the insights of fintech providers
Once you know your areas of focus, it is helpful to understand the landscape of fintech providers for that specific challenge. Matching platforms are a big help.
Solutions can generally be built more quickly and cheaply by third parties. Sourcing can be a cost-effective way of bringing technology, innovation and talent into your firm. As well as options such as white labeling or acquiring, partnering is another approach that could prove viable; the trend over the past couple of years towards collaboration and partnership is growing. Whichever approach you choose, you must develop processes and mechanisms to embed solutions proposed by fintech entrepreneurs.
The road ahead
The sheer speed with which fintech companies are gaining traction in the market is forcing more established organizations to evolve. The journey will take years, even if you are well prepared. And the truth is it may never end, due to the evolving nature of the field. If you’re not already investing in your fintech strategy on a significant scale, your competitors may already be stealing a lead.
Our Services and further information:
- Full survey: Forging the future: How financial institutions are embracing fintech to evolve and grow
- KPMG’s expertise in Banking
- KPMG’s expertise in Insurance