It depends on how we look at it. Geographically speaking, it is China versus the rest of the world. The Beijing government sought to quickly provide its population with access to banking services and this was made possible by technological players like Alibaba and Tencent with minimum regulatory requirements. These players have penetrated almost all financial services segments and often have higher market shares. They have dominated payments and insurance and Alibaba operates the world's largest money fund. They also obtain much more information through the social media they control. This makes the automation of financial services possible, and the Chinese have no concerns about privacy and the protection of personal data. In other markets, in Europe and in the USA, banks have assimilated fintechs into their ecosystems because the latter need an appropriate scale of operation and capital. At the same time, the number of digital banks, brought to life both by traditional players and fintechs, such as Swedish Nordnet Bank, Discover Bank, Singapore Digibank, or a number of British banks, is growing. In the United States, the digital, branchless QuickenLoans has a larger share of the mortgage market than Wells Fargo, one of the largest banks.
In my opinion both. It all depends on their approach. Increasingly, the banking sector is starting to build digital platforms on which customers will have access to many products offered by various players. The companies with strong brands running these open platforms will win. These can be banks or large technology companies. For example, the Spanish bank BBVA implemented such an open platform in the US. Royal Bank of Canada runs a platform offering various services from finance to law, and accounting for small and medium-sized companies under the Wave brand. Similar solutions focused on various customer needs can also be found in Australia.
This border means being part of the customer's experience in many areas and even anticipating his or her needs, as well as so-called commodification, or treating financial services in the same way as energy or telephone services, where price is of primary importance. If banking becomes dominated by digital platforms, you will have to offer ultra-low prices to operate on them, and this will be possible only for really big players like Alibaba or Amazon. As part of this trend, conversational banking, which means managing your finances through voice and not clicking, will continue to develop.
Yes, this is true, therefore the survival of many players will depend on their ability to create other revenue streams, often unrelated to their core business, or to act as platform owners to get commission from third-party providers. Other suppliers of capital will also appear and banks will lose their monopoly in this area because they are only intermediaries in the trade of money.
This is true even in the United States, where some of the powers were transferred to the state level. Regulatory authority in New York is the most demanding one in this scope. The Federal Reserve and the Office of the Comptroller of the Currency (OCC) deal with the licensing of large financial institutions. The United Kingdom shows a very liberal approach. Some countries approach this issue fragmentarily. For example, Switzerland did not ban the circulation of cryptocurrencies by creating a crypto valley, where companies can develop technology in this area. Perhaps this is the way to create a global advantage in this area. However, the example which probably best reconciles the development of financial technologies with security is the regulatory authority in Singapore (MAS).
I am not certain if everyone wants it. However, the best way is to try to proactively understand these phenomena and solutions, and this is what the Singaporean MAS is doing. It is about allowing you to experiment without the risk of shaking the entire financial system and acting to the detriment of your customers.
I think that in Europe the problem for these companies consists in the fact that no other location can replace London, also in terms of fintech solutions. Some companies move to, for example Berlin or Frankfurt, but in my opinion, this will not change much. These cities do not have the appropriate infrastructure to absorb so many companies. However, the problem lies in the uncertainty as to the final conditions for the exit from the European Union, and this causes a significant halt to investments. In this sense, New York remains the biggest beneficiary of Brexit.
The answer is not unambiguous because you need to take several aspects into account. What is certain is that the demand for these services will not disappear because they are the lifeblood of financial institutions and an important part of their infrastructure. Conversely, the pressure on margins and costs results in even greater efforts to outsource many activities because their implementation by specialised operators is simply cheaper and faster and takes place on a large scale. This affects the growth of investment and employment in shared service centres. Automation and robotisation will act against this. However, the final result should be positive.
Yes, this is true. In order to combat these threats, many companies must acquire completely new, technological competencies in the implementation of each new product or service, and that is why they prefer to delegate them to specialists. What is more, market regulators demand access to large amounts of data and information in real time. There are, therefore, solutions that enable companies to meet these requirements, which also often make it possible to avoid sanctions or high penalties.
We develop and implement solutions to detect and prevent organised financial crime, such as money laundering, tax evasion and human and drug trafficking. We help companies to implement the ‘know your customer’ (KYC) policy. We work with governments because we need to know the law in this area in different jurisdictions. We also support e-commerce companies which is an area of fraud, for example on the basis of false identity and hacker activities.
It is my first time here and I am very impressed. This is a beautiful city. Gdańsk is a larger version of Bruges where I spent many years. In economic terms, it is a place with a significant supply of talent at a reasonable price. There is adequate infrastructure and urban space which ensure a good standard of living and attract people. There are also good language skills and an open culture, which are important to us because we employ people from 21 countries speaking 34 languages. The involvement of the local government is also an important issue.
Both. We would like to launch services to combat so-called market abuse, which involves crimes arising from the use of unauthorised or illegally obtained information for financial gain, as is the case, for example with stock exchanges. We develop tools that prevent or detect market abuse and manipulation.
Thank you for the interview.
By Mirosław Ciesielski, Interia.pl
The interview originally has been published in Polish at Interia.pl. Read the Polish version
John Garvey is a partner in PwC New York office and the Global Financial Services Leader.
John's experiences and skill sets range from business strategy to technology, risk and operations.
PR Manager, PwC Poland
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