Disruptions in Banking and Financing on the horizon, brace for impact

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Major disruptions in Banking and Financing on the horizon; thanks to new technologies from Big Data Analytics to Mobile Apps that are reshaping this sector at a fast pace, resulting in new ways for companies and customers & consumers to interact, to manage their money and to conduct transactions.

Global investment in Fintech ventures hit $5.7 billion in the first quarter of 2016, and about half the funding went to projects in Asia, primarily in China. “The reason funding is taking off now is that the four platforms – Mobility, Big Data (IoT) and Analytics, Blockchain Technology (Bitcoin) and Machine Learning (AI) – are in their infancy,” said Catherine Wood, CEO of ARK Investment Management (US) at the Annual Meeting of the New Champions in 2016.

The fact is that Banking and Financial Services is one of the largest industries that is still not fully digitalized. In this field of activities, the technological revolution has just begun.

So let’s see what we’re up to and what major disruptions we may foresee.

Overview of upcoming disruptions in Banking and Financing


In regards to Mobility, the thing is, consumers are getting used very fast to be able to bank and finance at the fingertips, anytime, anywhere, now!  And that’s just going to accelerate. The key concept here is “anytime, anywhere”; meaning that, intermediary or third-party service is being taken out of the picture, and maybe even also humans… soon!

Fintechs are growing rapidly mostly because they solve “real problems for consumers,” said Taavet Hinrikus, CEO of TransferWise (UK) and Co-Chair of the Annual Meeting of the New Champions 2016.  “Solutions such as digital remittances are typically much cheaper than banking transactions like wire transfers and are often executed directly on mobile platforms, which means that they are inclusive and widely available,” he added.

“In terms of Mobile Lending and other Fintech solutions, China is leading the world,” Tang Ning, Founder & CEO of CreditEase (China). “Venture capital is paying attention to the wrong things in fintech,” he asserted. “The quality of credit and risk management are fundamental things to which investors should pay attention to,” he added.

So, does that mean that Banks and Financial Institutions’ local branches are going to disappear completely? Most probably… at the least, certainly in many many local areas.


Big Data plus IoT

A key factor in the growth of Fintech has been the growth and increasing sophistication of Big Data Analytics. “The quality of data is very important,” said Xu Haotian, CEO of Fangcheng Technology (China).

The fact is that Big Data will grow much bigger, exponentially, with the help of IoT. And that’s something pretty big to take into account, the two will work hand in hand, providing information and data in an automated fashion for and from a plethora of services including financial transactions for P2P, P2M, M2P and, of course, M2M. That’s a pretty big deal, too.

Let’s add that in the case of Internet of Things (IoT), there is an urgent need for a blockchain-type settlement system underneath simply because Banks & Financial Institutions won’t be able to settle trillions of trillions of real-time transactions between things.


Blockchain Technology

So, what is “Blockchain Technology” and how will it impact our lives and the way we do Banking and Financing?

Dan Tapscott, in an interview with McKinsey, describes it this way:” The Blockchain is basically a distributed database providing direct p2p transactional service which, by means of state-of-the-art cryptography, can securely and immutably record any type of transactions without the need of third-parties.”

securely and immutably record any type of transactions” is a pretty big deal, in the sense, that it could record any structured information, not just who paid whom but also who married whom or who owns what land or what light bought power from what power source.

That’s worth noticing and understanding.

without the need of third-parties” is also a pretty big deal too, as pointed out by Michael Mainelli, executive chairman of Z/Yen Consulting Group (London, UK), who says that “Blockchain Technology is likely to transform all financial markets because they rely on trusted third-parties,” suggesting that Blockchain Technology could displace traditional trusted third-party functions in banking, securities and insurance.

In short, Banks and Financial Institutions will have to hop aboard the Blockchain Technology wagon very soon if they don’t want to be left behind.

Dan Tapscott goes even further believing that Blockchain Technology could offer genuine privacy protection and “a platform for truth and trust.”

Three points worth noticing, according to Dan:

  • Blockchain Potential Finance & Money disruptions: moving money, storing money, lending money, trading money, attesting money, accounting money, etc.
  • Blockchain Technology Platforms like Ethereum can be used for any type of transactions; for example, musicians can use it to protect their rights and sell their music directly.
  • Blockchain Technology Governance may become a major issue since there is none for the moment.

“I’ve never seen a technology that has greater potential for humanity” – Dan Tapscott


AI & Machine Learning

As for AI and Machine Learning, well, the sky is the limit which nobody can predict for the moment how high it will be; hence, your bet is as good as anybody else’s.

But it is safe to say that a quantum leap will happen at one point in the near future (most probably with the arrival of quantum computers) of, not only business, but also humanity itself and then again, nobody can predict in what way!  Why?  Well, if you integrate AI-augmented capabilities to a world filled with IoT devices , it’s pretty hard to foresee where the combined effect of trillions of local intelligent devices interacting together will take us and the impact it will have on Banking & Financing… even less, society.



Good luck in building a plan to face the many disruptions about to happen in the field of Banking and Financing services. Perhaps, the best plan will be to stick to the fundamentals, that is, always offering the right service to the right customer at the right time and place.

Considering these challenges, having a highly-skilled IT Consultant at hand could turn out to be quite an asset.

For the rest, as usual, plan on adapting to changes… only faster.


Denis Paul & Michel

Sources: McKinsey (Dan Tapscott), The World Economic Forum, The Annual Meeting of the New Champions 2016

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