Financial Technology and the Evolving Landscape of Banking and Financial Sector

Technology driven financial services transformation is profoundly changing the nature of banking. The developments is various domains such as payments, lending, credit assessments etc., are being driven by the ability to extract and process vast amounts of data and predominantly by firms outside the finance industry. Financial Technology is a rapidly growing industry, with significant investments and research being undertaken. In fact, SSRN reports that FinTech-related research is now the fastest-growing research topic.

Traditionally banks have neither been the pioneers nor the leaders of driving technological innovations in financial services and products. Incumbents including Banks and other firms in the financial services sector are paying close attention to the Fintech space to not only implement some of the emerging technologies to improve their services but also to determine competitor threats to their ongoing business strategies. Banking executives, including CEOs of major banks, have stated concerns about losing customer share to new FinTech firms and digital disruptors.

Management executives of the incumbent financial institutions must now assess and evaluate the inadequacies of their current infrastructures, their value proposition to customers, and determine if their firm is equipped to face the fast-changing regulatory and competitive environment.

The purpose of this paper is to draw the attention of stakeholders in FinTech and Finance domains to the current gaps in banking technology infrastructure, and the urgency warranted to incorporate emerging financial technologies to drive business strategies.

The analysis in the paper would shed light on the evolving financial sector and the trans-formative financial technologies and provides a brief summary of some of the academic research on FinTech applications in areas such as Lending and Payments services, BigData Analytics on Customer and risk management, and Blockchain applications.

Considering the increased regulatory scrutiny that banks find themselves post the Royal Commission and the changing industry environment, the report recommends that banks assess their agility to adopt advances in technology to maintain a competitive advantage. The key recommendation of the report is that financial firms develop a firm-wide holistic view of the growing volume of data so that a strong foundation is built upon which technologies such Big Data and Blockchain can be implemented to drive business strategy decisions.