How FinTech is Shaping the Future of Banking | Henri Arslanian | TEDxWanChai

Summary

The FinTech revolution is transforming banking with technologies like AI, blockchain, and digital payments, impacting financial centers and creating winners and losers. Traditional banks face challenges from tech firms and startups, leading to potential job losses and the need for new skill sets. The industry is also focusing on financial inclusion, aiming to provide services to the unbanked. Banks must adapt by fostering innovation and educating future talent in areas like design thinking and coding.

Takeaways

• 💡 The FinTech revolution is transforming the banking industry and will create winners and losers.
• 🏦 Traditional banks are being disrupted by technology firms like Facebook, Alibaba, and Tencent, which are offering financial services.
• 📱 FinTech innovations such as AI, blockchain, and peer-to-peer lending are reshaping financial services.
• 🚪 The 2008 financial crisis created a gap between customer expectations and the services offered by banks, allowing FinTech to step in.
• 🤖 Tech firms are focusing on consumer-facing services, leaving backend operations to traditional banks.
• 🌍 Financial inclusion is a major positive outcome of the FinTech revolution, with millions of previously unbanked individuals gaining access to financial services.
• 📉 Traditional banking jobs are at risk, with estimates of 30% to 50% job losses in the next decade due to automation and FinTech.
• 👩‍💻 The bankers of the future will have different skill sets, including design thinking, coding, and product development.
• 🎯 Startups and new FinTech firms are offering more transparent, cost-effective, and customer-friendly solutions.
• 🎓 Education systems must adapt by integrating FinTech-related courses into finance programs to prepare future talent for the changing industry.

Q & A

What is the FinTech revolution, and why is it significant?

The FinTech revolution refers to the transformative impact of financial technology on the design and delivery of financial services. It is significant because it is changing the traditional banking industry by introducing innovations like artificial intelligence, peer-to-peer lending, blockchain, digital payments, and Robo-advisors, which enhance user experience and convenience.

Why did banks fall behind in adopting new technologies after the 2008 financial crisis?

After the 2008 financial crisis, banks were focused on meeting new regulatory requirements and paying fines, leaving innovation as a low priority. Meanwhile, technological advancements such as smartphones, social platforms, and on-demand services created a gap between what banks offered and what customers expected.

How are non-traditional players like Facebook and Alibaba disrupting the financial services sector?

Non-traditional players such as Facebook and Alibaba are entering financial services by offering products like money transfers, student loans, and investment funds. These tech firms have existing touchpoints with customers and can leverage their platforms to provide financial services, challenging traditional banks.

What is the impact of the FinTech revolution on traditional banking jobs?

The FinTech revolution is expected to reduce traditional banking jobs by up to 30-50% in the next decade. Many banking functions, such as loan offerings and asset management, are being taken over by technology-driven platforms, creating a need for new skill sets like programming and design, rather than traditional banking roles.

What is Financial Inclusion, and how is FinTech helping address it?

Financial Inclusion refers to providing financial services to individuals who are unbanked, often due to geographic or economic barriers. FinTech is helping by offering accessible, low-cost financial solutions, such as mobile money and peer-to-peer platforms, which are reaching underserved populations and helping them participate in the financial system.

How are technology firms integrating financial services into their platforms?

Technology firms are integrating financial services directly into their platforms, allowing users to transfer money, invest, buy insurance, and more without leaving their apps. Examples include WeChat offering red envelope money transfers and insurance, and Amazon experimenting with student loans. This integration provides convenience and expands the reach of financial services.

What is the future role of traditional banks in the FinTech-driven world?

In the future, traditional banks may be relegated to handling back-end functions such as settlements and regulatory reporting, while technology firms and FinTech startups control the front-end customer experience. Banks could become commoditized utility providers for these firms, focusing on operational aspects rather than customer interaction.

Why is there a need to change how the next generation of financial professionals is trained?

There is a need to change how financial professionals are trained because the skills required in the future will be different. Traditional courses like economics and corporate finance need to be supplemented with subjects like coding, product development, and design thinking to prepare graduates for the technology-driven financial landscape.

What concerns do traditional banks have regarding FinTech startups?

Traditional banks are concerned that FinTech startups are focusing on the most profitable aspects of banking, such as lending and asset management, while leaving less lucrative functions to banks. Startups are also more agile and customer-focused, which poses a threat to banks' existing business models.

How are innovations like artificial intelligence and the Internet of Things transforming banking services?

Innovations like artificial intelligence (AI) and the Internet of Things (IoT) are transforming banking by making services more personalized and efficient. AI-powered chatbots can replace call centers, and IoT technologies can embed financial services in daily life, such as adjusting car insurance premiums based on driving behavior without user intervention.