While the needs for financial services remain essentially the same (pay, save, invest, finance a project and insure against risk) FinTech is changing the way these needs are addressed. FinTech is more than a contraction of “Finance” and “Technology”, it is rather a shorthand for innovation in financial services. But how disruptive is FinTech for the financial sector? 

By Grégory Weber, FinTech Leader and Director of the Market Research Centre – PwC Luxembourg
Powered by technology advances, changing customer behaviour and a more inclusive regulatory environment, the financial sector is entering a deep transformation, with FinTech as is its catalyst. In a world where everyone is connected, FinTech is mainly driven by the integration of the SMAC technologies (Social media and Mobile, Analytics and Cloud). These innovations are allowing new business models to emerge, providing solutions empowering clients, such as peer-to-peer lending and crowdfunding platforms. “Banking is no longer somewhere you go but something you do.” 1

“Innovations in financial technology have the potential to completely redefine the financial services sector” Sir Mark Walport, UK government’s Chief Scientific Adviser

However FinTech is an opportunity, rather than a threat for the financial sector. FinTech helps financial institutions to transform their services. Mobile payments are becoming mainstream. DigiCash, a mobile payment app, already covers 80% of bank accounts in Luxembourg. Beginning of 2015, Fidelity acquired eMoney Advisor, a digital wealth management solution. Some peer-to- peer platforms partnered with banks (e.g. Funding Circle and Santander) to give small businesses greater access to finance. Insurance companies like Aviva, Axa and Allianz are already fostering close ties with the FinTech community to produce sensor-embedded and data- driven devices.
The truly disruptive innovation will certainly come from the “block chain” technology, triggering process and cost simplification. The block chain, first brought by Bitcoin, is a public and unbreakable ledger that serves as a record of transactions. According to the Bank of England, it could have far- reaching implications and its impact on the financial industry could be much wider than payments. “Many have come to believe that this technology can be adapted to record and verify financial transactions, from clearing securities to making cross- border payments”. 2

“Accelerating technology- driven innovation is a top priority”, Peter Sands, CEO – Standard Chartered Bank

As a leading international financial and data hub for cross-border transactions, Luxembourg has everything to gain from the FinTech boom. With its “Digital Lëtzebuerg” strategy, the government put Innovation in financial services on top of its priority list. This top-down approach can be very efficient and Luxembourg, thanks to its extraordinary ability to adapt to change, has a serious role to play.

“Financial Services is about to have its Napster moment”, Jeff Stewart, CEO – Lenddo

1. Brett King, Bank 3.0
2. The Wall Street Journal, UBS to open Blockchain Research Lab in London, April 2015

[colored_box color=”blue”]

PwC Luxembourg is the largest professional services firm in Luxembourg with 2,450 people employed from 55 different countries. It provides audit, tax and advisory services including management consulting, transac- tion, financing and regulatory advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. It helps its clients create the value they are looking for by giving comfort to the capital markets and providing advice through an industry focused approach.
The global PwC network is the largest provider of professional services in audit, tax and advisory. We’re a network of independent firms in 157 countries and employ more than 195,000 people. Tell us what matters to you and find out more by visiting us at www.pwc.com and www.pwc.lu.[/colored_box]

[toggle title=”Lire les précédents articles”]

• « Il nous faut révolutionner l’expérience client » – Avis d’expert – Marc Aguilar, BGL BNP Paribas
• Devenir un hub FinTech aux ambitions internationales – Avis d’expert – Michel Rodriguez, EBRC
• Avec Wega, le paiement se fait acoustique – Case Study – EBRC/WEGA
• La Spuerkeess facilite l’usage du mobile banking – Case Study – Jean Hilger, BCEE
• Le Luxembourg : la future Sillicon Valley des FinTech – Carte Blanche – Alexandre Rochegude, KPMG
• Le Luxembourg ne peut pas se permettre de rater le train des FinTech – Grand entretien – Nicolas Mackel, Luxembourg For Finance

[/toggle]