Is there life after fintech?
September 12, 2019
The latest crop of up-and-coming fintech companies all have one thing in common: they’re forcing established financial service providers to operate on an entirely new playing field. Just what does fintech have in store for banks, asset managers, and finance professionals?
By harnessing technological innovations to create new payment and investment platforms, the fintech sector is rapidly usurping roles that have traditionally belonged to banks and asset managers. A wave of new fintech companies, including Dutch online payment platform Adyen and automated wealth manager Pritle, are forcing established financial service providers to look themselves in the mirror and ask: "Is there life after fintech?”
Completely different market and strategy
The “invasion” of fintech companies hasn’t affected the basic rules of our financial system, which have remained unchanged. But when it comes to markets and strategy, there has been a seismic shift. Established banks, insurers and asset managers must overhaul their business models or be left behind. Banks and asset managers, in particular, are currently asking themselves the burning question: “How can we offer added value, and what should our new strategy be?”
Responding to fintech
Over the last five to ten years, banks have undergone multiple rounds of restructuring, partly due to digitization and the rise of fintech in the financial services sector. A number of banks have responded to the proliferation of new fintech payment platforms by shifting their focus to return to their core business: providing credit. Some asset managers have done just the opposite and have chosen to meet the competition head-on. They’ve begun to compete with the investment services provided by fintech companies, and many are now also offering passive AEX-index investments, such as Robeco's automated investment management service, RoBo.
New mission, vision, and expertise
For banks and asset managers, redirecting your focus to your core activity and adjusting your mission, vision and strategy accordingly not only indicates that you intend to excel in this core activity, but also that you want to be able to control the associated risks more effectively. In order to achieve this, your organization must invest in expertise.
Investing in financial analysis
For example, a finance professional working at a bank that has chosen to reorient towards a lending-based business model will need to dive deeper into financial analytics in order to more accurately assess the value of companies applying for credit. If banks turn to lending as their primary source of revenue, then their continued existence will depend on generating accurate risk analyses for clients who come to them for credit. Professionals capable of providing these in-depth financial analyses and of understanding how to use this data effectively can make a powerful contribution to strategic discussions about potential new business models within their organizations.
Looking to stay ahead of fintech?
Our part-time Executive Master in Finance features a strong focus on financial analysis. Not only will you develop the tools you need to help established financial service providers transition to new business models, but you’ll also learn to produce thorough, accurate value assessments and risk analyses for use in corporate credit applications and other situations.
Read more about this program or contact our Program Adviser.