What does 2016 have in store for financial services?



By Bill Fenick, Strategy and Marketing Director, Financial Services

2015 saw further complexities and shake ups in the financial services industry as ‘disruptive’ FinTech companies in the sharing economy continued to gain ground in the market. In addition, the shift towards a technology-focused company has also certainly shaken up boards of companies, placing further onus the need for tech savvy board members.

Here we shall look back over the year, reviewing how accurate our predictions for 2015 were and then what we think 2016 will have up its sleeve.

Reflecting on our 2015 predictions:

  • The sharing economy gets complicated: This time last year, we predicted that services, such as Uber and Airbnb, in the sharing economy would bring considerable disruption to the insurance industry in 2015. However, we have seen this taking more time than we originally thought, with many factors at play but with the complicated insurance industry playing a major role. This doesn’t mean that growth will be stunted. Quite the contrary, we believe that services in the sharing economy will continue to add more innovation to this space.
  • Mobile only: Our prediction was that financial services would operate in a purely mobile environment. Ironically, we have seen this trend mainly adopted by the established companies in the industry as they extended their platforms as part of a natural evolution in a mobile world. This is a trend that will continue to happen in many years to come.
  • Rise of the CTO: What I have seen this year is that the boards of companies are ensuring they have tech savvy people on the boards. Previously it has just been industry veterans but we are seeing industry giants struggling because of technology. This year has demonstrated the importance of having tech savvy people on the boards of multi-national companies to not only understand the tech landscape but to also act as a guide. The various headlines reporting the data breaches and outages experienced by well-known brands demonstrated the ramifications of not investing properly in tech experts.

Whilst these were our predictions for 2015, this does not mean to say that now that the year is coming to a close, these are no longer important trends in the financial services industry. These, of course, will continue to exist and flourish in the year ahead. But looking to 2016, I think the most important trend will be the mind shift from viewing these new players as ‘disruptive’ and instead as ‘innovative’.

Looking ahead to 2016:

  • Nimble giants: FinTech has very much grown in presence across the European B2B market as established institutions look to keep pace in the digital world with both existing and new customers. The large institutions will need to embrace innovation in order to stay current. As such, in 2016, we expected to see the larger players using their muscle to acquire the nimbleness of FinTech firms.
  • Building superhighways: 2016 will see FinTech further enhance and elevate the established players in the financial services industry. Opening up their platforms and exposing APIs allows the established players to build superhighways for distribution, whilst maintaining their position. This is nothing new - we have seen this model before where a tier 2 has outsourced its execution services to the tier 1 in the banking system, for example. However, 2016 will be the year this old model gets new bells and whistles where exciting new start-ups and established players work in parallel on a mutual win-win agreement.
  • ‘Maturity’ in the market: 2016 will see a more practical edge in the FinTech industry as larger European institutions assess the compliance risks on an infrastructure of a new product. If it is based in the cloud, for example, prospective customers will need to know where the cloud is based – particularly in light of the Safe Harbour ruling this year. Overall, customers of potential FinTech firms will demand maturity, both in terms of reliability and security. Those firms that can offer this will quickly distinguish themselves from the crowd.