PWC have just released their Global FinTech report dated March 2016 titled “Blurred Lines: How FintTech is shaping Financial Services”
In the report they note that more than 20% of Financial Services business is at risk to FinTechs by 2020, and 57% are unsure about or unlikely to respond to blockchain technology.
Interestingly another word accountants are familiar with is in the report. “Disintermediation” is noted as being FinTech’s most powerful weapon, with Fintech slashing costs and indicating the FS sector must leverage the FinTech system.
This 36 page report is well worth reading to gain an understanding of this dynamic segment which is at the intersection of the financial services and technology sectors.
We expect clear similarities can be drawn between Disintermediation expected in the accounting world. For instance, on Australian SMSF software offering is at $0 cost with revenue earned by charging suppliers a percentage of the fee for the service they provide. It’s like Airtasker for SMSF’s.
Back to the PWC report, new digital technologies are likely to disrupt consumer banking and payments, followed by insurance and asset management. Looking online, there is already low level disruption happening in the fund transfer/payment/forex markets by Fintech companies.
And FinTechs aren’t playing on a level playing field. They are willing to use the meta data they mine from their customers, while traditional Financial Services companies are more likely to be stuck with Excel spreadsheets and legacy computer systems. You can again draw clear comparisons between New Age accounting firms who are wholly on the cloud, deploying cloud accounting/tax/marketing systems (and yes, mining meta-data) versus older firms that are still struggling with legacy computer systems, legacy desktop bookkeeping systems for clients and staff that are facing juggling several legacy software products.
The changes coming fast into the Financial Services sector will impact the way accountants do business, and certainly a forewarning of the types of changes that accountants can eventually expect in their industry
You can access the report by clicking here: PwC FinTech Global Report.
More information available from PwC website.