pwc_fintech_global_report.pdf

Blurred lines:
How FinTech is
shaping Financial
Services
pwc.com/fintechreport
20%
More than 20% of
FS business is at risk
to FinTechs by 2020
57%
are unsure about or
unlikely to respond to
blockchain technology
Global FinTech Report
March 2016

2 PwC Global FinTech Report
Title Key messages
Blockchain: an
untapped technology
is rewriting the
FS rulebook
Heading for bargain
basement FS? FinTech
is slashing costs
The free lunch is over:
FS must leverage the
FinTech ecosystem
FinTech is shaping FS
from the outside in
Where traditional
financial institutions
have failed, FinTechs
are succeeding
Disintermediation:
FinTech’s most
powerful weapon
Time to get off the
bench: over 20%
of FS business at risk
to FinTechs
Contents
Introduction 3
Section 1:
The epicentre of disruption 5
Section 2:
Emerging FinTech trends on the radar 9
Section 3:
An industry under siege 19
Section 4:
Offence is the best defence 22
Conclusion 29
Appendix 30
Summaries of the trends 31
DeNovo 34
Contacts 35

Introduction
It is difficult to imagine a world without the internet or mobile
devices. They have become core elements of our lifestyle and
have brought a high degree of disruption to virtually every area
of business. The financial services (FS) industry is no exception;
the digital revolution is transforming the way customers
access financial products and services. Although the sector has
experienced a degree of change in recent years, the constant
penetration of technology-driven applications in nearly every
segment of FS is something new. At the intersection of finance
and technology lies a phenomenon that has been accelerating
the pace of change at a remarkable rate and is reshaping the
industry’s status quo – it is called FinTech.
What is FinTech?
FinTech is a dynamic segment at the intersection of the financial
services and technology sectors where technology-focused
start-ups and new market entrants innovate the products
and services currently provided by the traditional financial
services industry. As such, FinTech is gaining significant
momentum and causing disruption to the traditional value
chain. In fact, funding of FinTech start-ups more than doubled
in 2015 reaching $12.2bn, up from $5.6bn in 2014 based on
the companies included on our DeNovo platform. Cutting-edge
FinTech companies and new market activities are redrawing the
competitive landscape, blurring the lines that define players in
the FS sector (see Figure 1).
Figure 1: FinTech is a complex ecosystem
Source: PwC
Regulators and
government
C. Infrastructure
players
A.
FS
institutions
B.
Tech
companies
D. Start-ups
Investors,
incubators and
accelerators
Consumers
and users
Emerging
technologies
and tools
FinTech is
shaping FS from
the outside in

Our objectives and approach
This report assesses the rise of new technologies in the FS sector,
the potential impact of FinTech on market players and their
attitudes to the latest technological developments. Additionally,
it offers strategic responses to this ever-changing environment.
Our analysis is based on the following:
1)
Primary data derived from the results of a global survey that
includes feedback from a broad range of players from the
world’s top financial institutions. For this study, we surveyed
544 respondents, principally Chief Executive Officers (CEOs),
Heads of Innovation, Chief Information Officers (CIOs)
and top-tier managers involved in digital and technological
transformation. Our survey was distributed to leaders in
various segments of the FS industry in 46 countries (see
Figure 2).1
2)
Insights and proprietary data from DeNovo, a Strategy
platform composed of a 50-member team of FinTech subject
matter experts, strategists, equity analysts, engineers
and technologists with access to over 40,000 public and
proprietary data sources.
In the first section, we explore FS market participants’
perspectives on disruption. Next, we highlight the main
emerging FinTech trends in the various FS industries and the
readiness of the market to respond to these trends. Finally,
we offer suggestions about how market players should
strategically approach FinTech.
1 Please refer to the appendix for more information about our survey sample.
Figure 2. Type of survey respondents
Source: PwC Global FinTech Survey 2016
Global breakdown
n Bank 30%
n
Asset and wealth
management company
21%
n FinTech company 20%
n
Insurance company 14%
n Other 11%
n
Fund transfer and
payments institution 4%
FinTech is a dynamic
segment at the intersection
of the financial services and
technology sectors where
technology-focused start-ups
and new market entrants
innovate the products and
services currently provided
by the traditional financial
services industry.

Banking
and
Payments
Insurance,
AssetManagement
andWealth
Management
Up to 22%
of business
at risk by
2020
Up to 28%
of business
at risk by
2020
The epicentre of disruption
1
New digital technologies are in the process of reshaping the
value proposition of existing financial products and services.
While we should not underestimate the capacity of incumbents
to assimilate innovative ideas, the disruption of the financial
sector is clearly underway. And consumer banking and
payments, already on the disruption radar, will be the most
exposed in the near future, followed by insurance and asset
management.
“We thought we knew our
customers, but FinTechs really
know our customers.”
A senior executive at a global banking organisation.

1.1 Disruption targets mostly
consumer banking and payments
In keeping with changes already underway, the majority of our
survey participants see consumer banking and fund transfer and
payments as the sectors most likely to be disrupted over the next
five years (see Figure 3).
In consumer and commercial lending, for example, the emergence
of online platforms allows individuals and businesses to lend and
borrow between each other. Lending innovation also manifests
itself in alternative credit models, use of non-traditional data
sources and powerful data analytics to price risks, rapid customer-
centric lending processes, and lower operating costs.
In recent years, the payments industry has also experienced a
high level of disruption with the surge of new technology-driven
payments processes, new digital applications that facilitate easier
payments, alternative processing networks and the increased use
of electronic devices to transfer money between accounts.
Disintermediation:
FinTech’s most powerful weapon
Figure 3: Areas of disruption
Consumer
banking
Fund transfer
payments
Investment
wealth
management
SME banking Brokerage
services
Property
casualty
insurance/
Life insurance
Commercial
banking
Insurance
intermediary
Market
operators
exchanges
Fund
operators
Investment
banking
Reinsurance
0%
20%
10%
30%
40%
50%
60%
80%
70%
Which part of the financial sector is likely to be the most disrupted by FinTech over the next 5 years? – All industries
Banking and capital markets
Asset and wealth management
Insurance/Reinsurance
Fund transfer and payments
Consumer banking and fund transfers
payments are likely to be the most disrupted
sectors by 2020

1.2 Asset management and insurance
are also on the disruption radar
Although a high level of disruption triggered by FinTech is
already beginning to reshape the nature of lending and payment
practices, a second wave of disruption is making inroads in the
asset management and insurance sectors. Our survey found that
this perception is confirmed by insiders. Nearly half of insurers and
asset and wealth managers consider their respective industries to
be the most disrupted. When asked which part of the FS sector is
the most likely to be disrupted by FinTech over the next 5 years,
74% of insurance companies identified their own industry, while
only 26% of players from other sectors agreed; 51% of asset
managers said their industry will be disrupted, while only 31% of
other players agreed. However, there seems to be a perception gap
here; professionals from other industries do not see the same level
of disruption in these areas. The fact that only insiders are aware
of this situation, while outsiders don’t perceive it could indicate
that the disruption is in its very early stages (see Figure 4). Even so,
venture capitalists are looking very closely at start-ups dedicated
to reinventing the way we invest money and buy insurance.
Annual investments in InsurTech start-ups has increased fivefold
over the past three years, with cumulative funding of InsurTechs
reaching $3.4bn since 2010, based on companies followed in our
DeNovo platform.
The pace of change in the global insurance industry is accelerating
more quickly than could have been envisaged. The industry is at a
pivotal juncture as it grapples with changing customer behaviour,
new technologies and new distribution and business models.
The investment industry is also being pulled into the vortex of vast
technological developments. The emergence of data analytics in
the investment space has enabled firms to hone in on investors and
deliver tailored products and automated investing. Additionally,
innovations in lending and equity crowdfunding are providing
access to asset classes formerly unavailable to individual investors,
such as commercial real estate.
Figure 4: Areas of Disruption – Incumbents’ views vs. outsiders’ opinions
Insurance Investment Wealth Management
51%
74%
Asset
wealth
management
companies
Insurance
companies
31%
26%
Other
respondents
Other
respondents

1.3 Customer centricity is
fuelling disruption
As clients are becoming accustomed to the digital experience
offered by companies such as Google, Amazon, Facebook and
Apple, they expect the same level of customer experience from
their financial services providers. FinTech is riding the waves of
disruption with solutions that can better address customer needs
by offering enhanced accessibility, convenience and tailored
products. In this context, the pursuit of customer centricity has
become a main priority and it will help to meet the needs of
digital native clientele.
Over the next decade, the average FS consumer profile will
change dramatically as the Baby Boomer generation ages and
Generations X and Y assume more significant roles in the global
economy. The latter group, also known as “Millennials” (those
born between 1980 and 2000), is bringing radical shifts to client
demographics, behaviours and expectations. Its preference for
a state-of-the-art customer experience, speed and convenience
will further accelerate the adoption of FinTech solutions.
Millennials seem to be bringing a higher degree of customer
centricity to the entire financial system, a shift that is being
crystallised in the DNA of FinTech companies. While 53% of
financial institutions believe that they are fully customer-centric,
this share exceeds 80% for FinTech respondents. In this respect,
75% of our respondents confirmed that the most important
impact FinTech will have on their businesses is an increased
focus on the customer (see Figure 5).
Figure 5: Business challenges
In which areas do you see the most important impact
to your business from FinTech?
Meet changing
customer needs
with new offerings
Leverage existing
data and analytics
Enhance interactions
and build trusted
relationships
Enhance business
with sophisticated
operational capabilities
75%
51%
42%
42%
Where
traditional
Financial
Institutions have
failed, FinTechs
are succeeding

Emerging FinTech trends on the radar
To help industry players navigate the changes in the banking,
fund transfer and payments, insurance, and asset and wealth
management sectors, we have identified the main emerging
trends that will be most significant in the next five years in each
area of the FS industry.
Overall, the key trends will enhance customer experience,
self-directed services, sophisticated data analytics and
cybersecurity. However, the focus will differ from one FS
segment to another.
2
The methodology is based on DeNovo’s insights of
emerging FinTech trends for each financial segment
(see Summaries of trends in the Appendix). Industry
leaders assessed which trends in their segment will be
important for their business over the next five years and
indicated their likelihood to respond to each of them.
The trends in the upper right quadrant of the chart reflect
those that Financial institutions are prioritising for each
FS sector.
For each segment, a bubble chart benchmarks the trends
according to three indicators. The vertical axis of the
graph displays the level of importance. On the horizontal
axis, the likelihood to respond to these trends (e.g. allocate
resources, invest) is given, and the size of the bubbles is
proportional to the number of related FinTech companies
associated with the trend (see Figures 6, 7, 8 and 9).
Asset wealth
management
Banking
Insurance
Fund transfer
payments

2.1 Banks are going for a renewed
digital customer experience
Banks are moving towards non-physical channels by
implementing operational solutions and developing new
methods to reach, engage and retain customers.
As they pursue a renewed digital customer experience, many are
engaging in FinTech to provide customer experiences on a par
with large tech companies and innovative start-ups.
Simplified operations to improve customer
experience
The trends that financial institutions are prioritising in the
banking industry are closely linked (see Figure 6). Solutions that
banks can easily integrate to improve and simplify operations
are rated highest in terms of level of importance, whereas the
move towards non-physical or virtual channels is ranked highest
in terms of likelihood to respond.
Banks are adopting new solutions to improve and simplify
operations, which fosters a move away from physical channels
and towards digital/mobile delivery. Open development and
software-as-a-service (SaaS) solutions have been central to
giving banks the ability to streamline operational capabilities.
The incorporation of application program interfaces (APIs)
enables third parties to develop value-added solutions and
features that can easily be integrated with bank platforms;
and SaaS solutions assist banks in offering customers a wider
array of options – which are constantly upgraded, without
banks having to invest in the requisite research, design and
development of new technologies.
Figure 6: Trends in the banking industry ranked by importance and likelihood to respond
How important are these trends for your industry and how likely are you to respond to them?
(e.g. allocate resources, invest)
The size of the bubbles is proportional to the number of related FinTech companies as assessed by the DeNovo platform
Source: PwC Global FinTech Survey 2016 and DeNovo – see in Appendix the definitions of the above-mentioned trends.
Level
of
importance
Likelihood to respond to the trend
Less More
More
Less
1
Solutions that banks can easily integrate or incorporate to improve and simplify
operations
2 The move toward nonphysical or virtual channels
3
Simplified and streamlined product application processes to improve customer
experience
4 Increased sophistication in methods to reach, engage, and retain customers
5 Emergence of self-service tools
6 Digitalisation of cash- and treasury-management functions
7 Increase of services and solutions for underserved consumers
8 Enhanced credit underwriting/decisioning
9 Blockchain
10 The rise of marketplace or peer-to-peer lending
11 Democratisation of banking and personal finance
12 Emergence of new options in mid-market funding such as crowdfunding
1
2
3
4
5
6
8
7
11
9
10
12

The move towards virtual banking solutions is being driven, in
large part, by consumer expectations. While some segments
still prefer human interactions in certain parts of the process, a
viable digital approach is now mandatory for lenders wishing
to compete across all consumer segments.2
Online banks rely
on transparency, service quality and unlimited global access to
attract Millennials, who are willing to access multiple service
channels. In addition, new players in the banking market offer
ease of use in product design and prioritise 24/7 customer
service, often provided through non-traditional methods such as
social media.
So what? – Put the customer at the centre
of operations
Traditional banks may already have many of the streamlined
and digital/mobile-first capabilities, but they should look to
integrate their multiple digital channels into an omni-channel
customer experience and leverage their existing customer
relationships and scale. Banks can organise around customers,
rather than a single product or channel, and refine their
approach to provide holistic solutions by tailoring their offerings
to customer expectations. These efforts can also be supported by
using newfound digital channels to collect data from customers
to help them better predict their needs, offer compelling value
propositions, and generate new revenue streams.
2.2 Fund transfer and payments
priorities are security and
increased ease of payment
Our survey shows that the major trends for fund transfer
and payments companies are related to both increased ease and
security of payments (see Figure 7).
2
PwC, Consumer lending: understanding today’s empowered borrowers, 2015
Figure 7: Trends in the fund transfer and payments industry ranked by importance and likelihood to respond
Level
of
importance
Less More
More
Less
1
Advanced tools and technology to protect consumers from identity theft, fraudulent
transactions and account falsification
2 Increased push for faster payments
3 Rise of digital wallet adoption
4 Rise of next generation point-of-sale solutions
5 Proliferation of international/cross-border transfer platforms
6 Alternative retail-payment networks and fund-transfer solutions
7 Increased adoption of contactless technology for digital wallets
8 Simplification of online-checkout experience
9 Rise of peer-to-peer payment solutions
10 Increased value-added merchant service offerings
11 Blockchain
1
2
4
3
5
6
7 8
10
11
9

Safe and fast payments are emerging trends
Mobile smartphone adoption is one of the drivers of changing
payments patterns. Today’s mobile-first consumers expect
immediacy, convenience and security to be integral to payments.
In our culture of on-demand streaming of digital products and
services, archaic payment solutions that take days rather than
seconds for settlement are considered unacceptable, motivating
both incumbents and newcomers to develop solutions that
enable transfer of funds globally in real-time. End users also
expect a consistent omni-channel experience in banking and
payments, making digital wallets key to streamlining the user
experience and enabling reduced friction at the checkout.
Finally, end users expect all of this to be safe. Security and
privacy are paramount to galvanising support for nascent forms
of digital transactions, and solutions that leverage biometrics
for fast and robust authentication coupled with obfuscation
technologies, such as tokenisation, are critical components in
creating an environment of trust for new payment paradigms.
So what? – Speed up, but in a secure way
Speed, security and digitisation will be growing trends for the
payments ecosystem. In an environment where traditional
loyalty to financial institutions is being diminished and barriers
to entry from third parties are lowered, the competitive
landscape is fluid and potentially changeable, as newcomers like
Apple Pay, Venmo and Dwolla have demonstrated. Incumbents
that are slow to adapt to change could well find themselves
losing market share to companies that may not have a traditional
payments pedigree, but that have a critical mass of users and the
network connectivity to enable payment experiences that are
considered at least equivalent to the status quo. While most of
these solutions “ride the rails” of traditional banking, in doing so
they risk losing control of the customer experience and ceding
ground to innovators, or “steers”, who conduct transactions as
they see fit.
2.3 Asset and wealth management
shifts from technology-enabled
human advice to human-supported
technology-driven advice
Figure 8 clearly demonstrates that the main trend the asset
and wealth management industry is focusing on at present is the
increased sophistication of data analytics to better identify and
quantify risk.
More sophisticated data analytics as a
gateway for emerging trends
The proliferation of data, along with new methods to capture it
and the declining cost of doing so, is reshaping the investment
landscape. New uses of data analytics span the spectrum from
institutional trading and risk management to small notional
retail wealth management. The increased sophistication of data
analytics is reducing the asymmetry of information between
small- and large-scale financial institutions and investors,
with the latter taking advantage of automated FS solutions.
Sophisticated analytics also uses advanced trading and risk
management approaches such as behavioural and predictive
algorithms, enabling the analysis of all transactions in real time.
Wealth managers are increasingly using analytics solutions
at every stage of the customer relationship to increase client
retention and reduce operational costs. By incorporating
broader and multi-source data sets, they are forming a more
holistic view of customers to better anticipate and satisfy their
needs.
Mobile smartphone
adoption is one of the drivers
of changing payments
patterns. Today’s mobile-first
consumers expect immediacy,
convenience and security to
be integral to payments.

Figure 8: Trends in the asset and wealth management industry ranked by importance and likelihood to respond
Level
of
importance
Less More
More
Less
1 Increased sophistication of data analytics to better identify and quantify risk
2 Automation of asset allocation and how wealth is managed
3
Shift from technology-enabled human relationships to digital experiences with
human support
4 Application of leading technology to enable investments in new markets
5
Omnichannel interaction and distribution models help standardise customer
experience across all points of contact
6
Increasing number of service offerings that enable innovation to get to market and
scale faster
7
Rise of alternative distribution and marketing channels for awareness and lead
generation
8
Design and distribution of new products and services for traditionally unprofitable
customers
9 Innovation in brokerage services enabling better investment decision support
10 Rise of end user-created custom investment solutions
11
Increased use of community intelligence networks to enable better investment
decisions
12 Blockchain
Given that wealth managers have an upcoming multi-trillion-
dollar opportunity in the transfer of wealth from Baby Boomers
to Millennials, the incorporation of automated advisory
capabilities – either in whole or in part – will be a prerequisite.
This fundamental change in the financial advisor’s role
empowers customers and can directly inform their financial
decision-making process.
So what? – Withstand the pressure of
automation
Automated investment advice (i.e. robo-advisors) poses a
significant competitive threat to operators in the execution-only
and self-directed investment market as well as to traditional
financial advisors. Such robot and automatic advisory
capabilities will put pressure on traditional advisory services and
fees and will transform the delivery of advice. Many self-directed
firms have responded with in-house and proprietary solutions,
and advisors are likely to adapt with hybrid high-tech/high-
touch models. A secondary by-product of automated customer
analysis is the lower cost of customer onboarding, conversion
and funding rates. This change in the financial advisory
model has created a challenge for wealth managers, who
have struggled for years to figure out how to create profitable
relationships with clients in possession of fewer total assets.
Robo-advisors provide a viable solution for this segment and, if
positioned correctly as part of a full service offering, can serve
as a segue to full service advice for clients with specific needs or
higher touch.
1
2
3
4
5
6
7
8
9
10
11
12

2.4 Insurers leverage data and
analytics to bring personalised
value propositions while
proactively managing risk
The insurance sector sees usage-based risk models and new
methods for capturing risk-related data as key trends, while
the shift to more self-directed services remains a top priority in
order to efficiently meet existing customer expectations.
Increasing self-directed services for
insurance clients
Our survey shows that self-directed services are the most
important trend and the one to which the market is by
far most likely to respond. As is the case in other industry
segments, insurance companies are investing in the design and
implementation of more self-directed services for both customer
acquisition and customer servicing. This allows companies to
improve their operational efficiency while enabling online/
mobile channels demanded by emerging segments such as
Millennials. There have been interesting cases where customer-
centric designs create compelling user experiences (e.g. quotes
obtained by sending a quick picture of the driving licence and
the car vehicle identification number (VIN)), and where new
solutions bring the opportunity to mobilise core processes in a
matter of hours (e.g. provide access to services by using “robots”
to create a mobile layer on top of legacy systems) or augment
current key processes (e.g. FNOL3
notification, which includes
differentiated mobile experiences).
Figure 9: Trends in the insurance industry ranked by importance and likelihood to respond
Level
of
importance
Less More
More
Less
1 Self-directed services
2 Usage-based Insurance (pay as you go)
3 Remote access and data capture
4 Connected/smart car
5 New models of holistic advice (robo-advice)
6 Granular risk and/or loss quantification
7 Shift from probabilistic to deterministic model
8 Connected health medical advances
9 Ride-sharing solutions
10 Robotics and automation in core insurance
11 Blockchain
3 First Notice of Loss
1
2
3
5
6
7
8
10
4
9
11

Usage-based insurance is becoming more
relevant
Current trends also show an increasing interest in finding new
underwriting approaches based on the generation of deep risk
insights. In this respect, usage-based models – rated the second
most important trend by survey participants (see Figure 9) –
are becoming more relevant even as initial challenges such as
data privacy are being overcome. Auto insurance pay-as-you-
drive is now the most popular usage-based insurance (UBI),
and the current focus is shifting from underwriting to the
customer. Initially, incumbents viewed UBI as an opportunity to
underwrite risk in a more granular way by using new driving/
behavioural variables, but new players see UBI as an opportunity
to meet new customers’ needs (e.g. low mileage or sporadic
drivers).
Data capture and analytics as an emerging
trend
Remote access and data capture was ranked third by the survey
respondents according to the level of importance (see Figure 9).
Deep risk (and loss) insights can be generated from new data
sources that can be accessed remotely and in real-time if needed.
This ability to capture huge amounts of data must be coupled
with the ability to analyse it to generate the required insights.
This trend also includes the impact of the Internet of Things
(IoT); for example, (1) drones offer the ability to access remote
areas and assess loss by running advanced imagery analytics,
and (2) integrated IoT platforms solutions include various
types of sensors, such as telematics, wearables and those found
in industrial sites, connected homes or any other facilities/
equipment.
So what? – Differentiate, personalise and
leverage new data sources
Customers with new expectations and the need to build trusted
relationships are forcing incumbents to seek value propositions
where experience, transaction efficiency and transparency
are key elements. As self-directed solutions emerge among
competitors, the ability to differentiate will be a challenge.
Similarly, usage-based models are emerging in response to
customer demands for personalised insurance solutions.
The ability to access and capture remote risk data will help
to develop a more granular view of the risk, thus enabling
personalisation. The telematics-based solution that enables
pay-as-you-drive is one of the first models to emerge and is
gaining momentum; new approaches are also emerging in the
life insurance market where the use of wearables to monitor
the healthiness of lifestyles can bring rewards and/or premium
discounts among other benefits.
Leveraging new data sources to obtain a more granular view
of the risk will not only offer a key competitive advantage
in a market where risk selection and pricing strategies can
be augmented, but will also allow incumbents to explore
unpenetrated segments. In this line, new players that have
generated deep risk insights are also expected to enter these
unpenetrated segments of the market; for example, life
insurance for individuals with specific diseases.
Finally, we believe that, in addition to social changes, the driving
force behind innovation in insurance can largely be attributed
to technological advances outside the insurance sector that will
bring new opportunities to understand and manage the risk
(e.g. telematics, wearables, connected homes, industrial sensors,
medical advances, etc.), but will also have a direct impact on
some of the foundations (e.g. ADAS4
and autonomous cars).
4 Advanced Driver Assistance Systems
The telematics-based solution
that enables pay-as-you-drive
is one of the first models
to emerge and is gaining
momentum.

2.5 Blockchain: an untapped
technology is rewriting the
FS rulebook
Blockchain is a new technology that combines a number of
mathematical, cryptographic and economic principles in order
to maintain a database between multiple participants without
the need for any third party validator or reconciliation. In simple
terms, it is a secure and distributed ledger. Our insight is that
blockchain represents the next evolutionary jump in business
process optimisation technology. Just as Enterprise Resource
Planning (ERP) software allowed functions and entities within
a business to optimise business processes by sharing data
and logic within the enterprise, blockchain will allow entire
industries to optimise business processes further by sharing data
between businesses that have different or competing economic
objectives. That said, although the technology shows a lot of
promise, several challenges and barriers to adoption remain.
Further, a deep understanding of blockchain and its commercial
implications requires knowledge that intersects various
disparate fields and this leads to some uncertainty regarding its
potential applications.
Uncertain responses to the promises
of blockchain
Compared to the other trends, blockchain ranks lower on the
agendas of survey participants. While a majority of respondents
(56%) recognise its importance, 57% say they are unsure or
unlikely to respond to this trend. This may be explained by
the low level of familiarity with this new technology: 83%
of respondents are at best “moderately” familiar with it and
only very few consider themselves to be experts (see Figure
10). This lack of understanding may lead market participants
to underestimate the potential impact of blockchain on their
activities.
Figure 10: Familiarity with blockchain
Source: PwC Global FinTech Survey 2016 n Average all industries n Fund transfer payments n Banks n AM WM n Insurance
Not at all familiar Slightly familiar Moderately familiar Very familiar Extremely familiar
Please describe the extent to which you are familiar with blockchain technology
40%
35%
30%
25%
20%
15%
10%
5%
0%
Extremely familiar: I feel as if I am expert on blockchain technology and how it works.
Very familiar: I feel as if I have fairly complete knowledge of blockchain technology and how it works.
Moderately familiar: I have read or heard about blockchain technology in the news and have researched it to some degree.
Slightly familiar: I have read or heard about blockchain technology in the news.
Not at all familiar: I do not know about blockchain technology at all.

The greatest level of familiarity with blockchain can be seen
among the fund transfer and payments institutions, with 30%
of respondents being very familiar with blockchain (meaning
they are relatively confident about their knowledge of how the
technology works).
How the financial sector can benefit from
blockchain
In our view, blockchain technology may result in a radically
different competitive future in the FS industry, where current
profit pools are disrupted and redistributed toward the owners
of new, highly efficient blockchain platforms.5
Not only could
there be huge cost savings through its use in back-office
operations but also large gains in transparency that could be
very positive from an audit and regulatory point of view. One
particular hot topic is that of ‘smart contracts’ – contracts that
are translated into computer programs and, as such, have the
ability to be self-executing and self-maintaining. This area is
just starting to be explored, but its potential for automating and
speeding up manual and costly processes is huge.
Innovation from start-ups in this space is frenetic, with the pace
of change so rapid that by the time print materials go to press
they could already be out of date. To put this in perspective,
PwC’s Global Blockchain Team has identified more than 700
companies entering this arena. Among them, 150 are worthy to
be tracked and 25 will likely emerge as leaders.
of survey respondents
recognise its importance,
but...
say they are unsure about
or unlikely to respond to
this trend
56%
57%
5 PwC, What’s next for blockchain in 2016?

The use cases are coming thick and fast but usually centre on
increasing efficiency by removing the need for reconciliation
between parties, speeding up the settlement of trades or
completely revamping existing processes, including:
• Enhancing efficiency in loan origination and servicing;
• Improving clearing house functions used by banks;
•
Facilitating access to securities. For example, a bond that
could automatically pay the coupons to bondholders, and any
additional provisions could be executed when the conditions
are met, without any need for human maintenance;
•
The application of smart contracts in relation to the Internet
of Things (IoT). Imagine a car insurance that is embedded
in the car itself and changes the premium paid based on
the driving habits of the owner. The car contract could also
contact the nearest garages that have a contract with the
insurance company in the event of an accident or a request
for towing. All of this could happen with very limited human
interaction.
So what? – An area worth exploring
When faced with disruptive technologies, the most effective
companies thrive by incorporating them into the way they do
business. Distributed ledger technologies offer FS institutions a
once-in-a-generation opportunity to transform the industry to
their benefit, or not.
However, as seen in the survey responses, the knowledge of and
likelihood to react to the developments in blockchain technology
are relatively low. We believe that lack of understanding of the
technology and its potential for disruption poses significant risks
to the existing profit pools and business models. Therefore, we
recommend a pro-active approach to identify and respond to
the various threats and opportunities that this transformative
technology presents. A number of start-ups in the field, such
as R3CEV, Digital Asset Holdings and Blockstream are actively
working to create entirely new business models that would lead
to accelerated ‘Creative Destruction’ in the industry. The ability
to collaborate on both the strategic and business levels with a
few key partners, in our view, could become a key competitive
advantage in the coming years.

An industry under siege
Typically, disruption hits a tipping point at which just under
50% of the incumbent revenue is lost in about a five-year
timeframe. Recent disruptions that provide valuable insight
include streaming video’s impact on the video rental market.
When broadband in the home reached ubiquity and video
compression technology matured, low cost streaming devices
were developed and, within four years, the video rental business
was completely transformed. The same pattern can be seen in
the internet direct insurance model for car insurance. At present,
50% of the revenue from the traditional agent-based distribution
model has been moved to direct insurance providers.
3.1 Business at risk will exceed
20% by 2020
According to our survey, the vast majority (83%) of respondents
from traditional FIs believe that part of their business is at risk
of being lost to standalone FinTech companies; it reaches 95% in
the case of banks. In addition, incumbents believe that 23% of
their business could be at risk due to the further development of
FinTech, though FinTech companies anticipate that they may be
able to acquire 33% of the incumbents’ business. In this regard,
the banking and payments industries are feeling more pressure
from FinTech companies. Fund transfer and payments industry
respondents believe they could lose up to 28% of their market
share, while bankers estimate they are likely to lose 24%
(see Figure 11).
3
Figure 11: Incumbents’ views of estimated share of business at risk to standalone FinTech
Fund transfer
payments
Banks Average AMWM
companies
Insurance
companies
What percentage of your business is at risk of being lost to standalone
FinTech companies within 5 years?
28% 24% 23% 22% 21%
Time to get
off the bench:
Over 20% of
FS business at
risk to FinTechs

3.2 A rebalancing of power
FinTech companies are not just bringing concrete solutions
to a morphing consumer base, they are also empowering
customers by providing new services which can be delivered
with the use of technological applications. The rise of “digital
finance” allows consumers to connect to information anywhere
at any time, and digital services can address their needs in a
more convenient way than traditional nine-to-five financial
advisors can.
According to our survey, two-thirds (67%) of the companies
ranked pressure on margins as the top FinTech-related threat
(see Figure 12). One of the key ways in which FinTechs support
the margin pressure point through innovation is step function
improvements in operating costs. For instance, the movement
to cloud-based platforms not only decreases up-front costs,
but also reduces ongoing infrastructure costs. This may stem
from two main scenarios. First, standalone FinTech companies
might snatch business opportunities from incumbents,
such as business-to-consumer (B2C) FinTech companies
selling their products and services directly to customers and
positioning themselves as more dynamic and agile alternatives
to traditional players. Secondly, business-to-business (B2B)
FinTech companies might empower specific incumbents through
strategic partnerships with the intent to provide better services.
Figure 12: Top threats related to the rise of FinTech
Pressure on margins Loss of market share Information security/
privacy threat
Increase of customer churn
In your opinion, what are the threats related to the rise of FinTech within
your industry?
67% 59% 53%
56%
“Regulatory and capital
barriers to entry in insurance
limit the impact of standalone
FinTech companies.”
Head of Relationship Management
in one of the largest asset managers
in France
“FinTech will complement
banking services, but will not
fully replace them.”
Head of Innovation at one of the
largest banks in Luxembourg

3.3 FinTech, a source of
opportunities
FinTech also offers myriad possibilities for the FS industry. B2B
FinTech companies create real opportunities for incumbents to
improve their traditional offerings. For example, white label
robo-advisors can improve the customer experience of an
independent financial advisor by providing software that helps
clients to better navigate the investment world. In the insurance
industry, a telematics technology provider can help insurers to
track risks and driving habits together with providing additional
services such as pay-as-you-go solutions.
Partnerships with FinTech companies could increase the
efficiency of incumbent businesses. Indeed, a large majority of
respondents (73%) rated cost reduction as the main opportunity
related to the rise of FinTech. In this regard, incumbents
could simplify and rationalise their core processes, services
and products, and consequently reduce inefficiencies in their
operations.
But FinTech is not just about cutting costs. Incumbents
partnering with FinTech companies could deliver a differentiated
offering, improve customer retention and bring additional
revenues. In this regard, 74% of fund transfer and payment
institutions consider additional revenues to be an opportunity
coming from FinTech. This is already true in the payments
industry where FinTech generates additional revenues through
faster and easier payments and digital wallet transactions.
Figure 13: Top opportunities related to the rise of FinTech
Cost reduction Differentiation Improved retention of
customers
Additional revenues
In your opinion, what are the opportunities related to the rise of FinTech within
your industry?
73% 62% 56%
57%
Heading
for bargain
basement FS?
FinTech is
slashing costs
“We work with start-ups
to deliver new innovative
solutions to our clients.”
largest banks in France

Offence is the best defence
FinTech is more than technology. It is a cultural mind-set.
Companies hoping to flourish need to shift their thinking to
better meet customer needs, constantly track technological
developments, aggressively engage with external partners and
integrate digitisation into their corporate DNA. To fully leverage
the potential of FinTech, FIs should have a top-down approach,
embracing new technologies in every aspect of their businesses.
4.1 Putting FinTech at the heart
of the strategy
The majority of the respondents (60%) put FinTech at the
heart of their strategy (see Figure 14). In particular, a high
number of CEOs agree with this approach (78%), supporting
the integration of FinTech at the top levels of management.
Advances in technology and communication, combined with the
acceleration of data growth, empower customers at nearly every
level of engagement making FinTech essential at all levels.
4
Figure 14: FinTech at heart
Please indicate to what extent you agree or disagree
with the following statement:
“My organisation has put FinTech at the heart of its
strategy.”
n Somewhat agree 27%
n Neither/nor 14%
n Disagree 13%
n
Somewhat disagree 11%
n Do not know 2%
n
Agree 33%
“Now we recognise that
technology may be the key
driver of the future.”
Head of Marketing in a large
insurance company in Switzerland
78%
of CEOs support the
integration of FinTech
at the top levels of
management

Our survey supports this notion. Among the respondents that
regard themselves as fully customer-centric, 77% put FinTech
at the heart of their strategy, while among respondents that
see themselves as only slightly customer-centric, only 27% put
FinTech at the same level. A smaller but still significant share
of respondents disagrees with putting FinTech at the heart of
their strategy (13%) (see Figure 14). This might be a business
risk in the long run, as firms that do not recognise the impact of
FinTech will face fierce competition from new entrants. As rivals
become more innovative, incumbents might run the risk of being
surpassed in their core business strengths.
The share of respondents from fund transfer and payments
organisations that want to put FinTech at the heart of their
strategy exceeds 80% (see Figure 15), a high proportion
compared to other sectors. At the other extreme are insurance
and asset and wealth management companies, where
respectively, only 43% and 45% of respondents consider FinTech
to be a core element of their strategy.
Figure 15: FinTech at heart – by industry
n Agree n Somewhat agree n Neither/nor n Somewhat disagree n Disagree n Do not know
Fund transfer and
payment institutions
Banks AM WM
companies
Insurance companies
Please indicate to what extent you agree or disagree with the following statement:
“My organisation has put FinTech at the heart of its strategy.”
4%
4%
8%
38%
46%
34%
22%
13%
11%
17%
15%
16%
16%
25%
23%
31%
14%
18%
3% 3%
19%
19%
1%

4.2 Adopting a ‘mobile-first’
approach
Adopting a ‘mobile-first’ approach is the key to improving
customer experience. As Section 2 shows, the biggest trends
in FinTech will be related to the multiple ways FS engages
with customers.
Traditional providers are increasingly taking a ‘mobile-first’
approach to reach out to consumers, e.g. designing their
products and services with the aim of enhancing customer
engagement via mobile. More than half (52%) of the
respondents in our survey offer a mobile application to their
clients, and 18% are currently developing one (see figure 16).
Banks, with a share of 81% offering mobile applications, are
increasingly using these channels to deliver compelling value
propositions, generate new revenue streams and collect data
from customers. According to Bill Gates6
, in the year 2030, two
billion new customers will use their mobile phones to save, lend
and make payments.
Significant growth in clients using mobile applications is
expected by 2020. While currently the majority of respondents
(66%) contend that not more than 40% of their clients use their
mobile applications, 61% believe that over the next five years,
more than 60% of their clients will be using mobile applications
at least once a month to access financial services (see Figure 17).
Figure 16: Offer of a mobile application
Do you offer your clients a mobile application?
n Yes 52%
n
Currently developing
a mobile app 18%
n No 30%
...more than 60% of their clients will be
using mobile applications (at least once
a month) to access financial services
6 Gates Notes, Annual Letter, 2015
61%
believe that over the
next five years...

40%
4.3 Towards a more collaborative
approach
Whether FS organisations adopt digital or mobile strategies,
integrating FinTech is essential. According to our survey, the
most widespread form of collaboration with FinTech companies
is joint partnership (32%) (see Figure 18). Traditional FS
organisations are not ready to go all in and invest fully in
FinTech. Joint partnership is an easy and flexible way to get
involved with a technology firm and harness its capabilities
within a safe test environment. By partnering with FinTech
companies, incumbents can strengthen their competitive
position and bring solutions or products into the market more
quickly. Moreover, this is an effective way for both incumbents
and FinTech companies to identify challenges and opportunities
as well as to gain a deeper understanding of how they
complement one another.
Given the speed of technology development, incumbents cannot
afford to ignore FinTech. Nevertheless, a significant minority
rather than a non-negligible share (25%) of survey respondents
do not liaise with FinTech companies at all, which could lead
to an underestimation of the potential benefits and threats
they can bring. According to The Economist,7
the majority of
bankers (54%) are either ignoring the challenge or talking about
disruption without making any changes. FinTech executives
confirm this view: 59% of FinTech companies believe that banks
are not reacting to the disruption by FinTech.
Figure 17: Current and target usage of mobile applications
81–100% 81–100%
Please indicate the percentage of clients currently
using the app at least once a month.
Please indicate the target percentage of clients you
would like to use the app within the next 5 years.
61–80% 61–80%
41–60% 41–60%
21–40% 21–40%
0–20% 0–20%
0% 0%
10% 10%
20% 20%
30% 30%
40% 50%
7 The Economist, The disruption of banking, 2015
The free lunch
is over: FS
must leverage
the FinTech
ecosystem

Figure 18: Dealing with FinTech
Do not know Other We acquire
FinTech
companies
We launch our
own FinTech
subsidiaries
We set up
venture funds
to fund FinTech
services
We rebrand
purchased
FinTech
services
We establish
start-up
programmes to
incubate FinTech
companies
We buy and sell
services to
FinTech
companies
We do not
deal with
FinTech
We engage in
joint partnerships
with FinTech
companies
How are you currently dealing with FinTech companies?
7% 9% 9% 11% 14% 14% 15% 22% 25% 32%
25%
of firms do not liaise with
FinTech companies at all,
which could lead to an
underestimation of the
potential benefits and
threats they can bring.

4.4 Integrating FinTech comes
with challenges
A common challenge FinTech companies and incumbents face
is regulatory uncertainty (see Figure 19). FinTech represents
a challenge to regulators, as there may be a risk of an uneven
playing field between the FS and FinTech companies. In fact,
86% of FS CEOs are concerned about the impact of over-
regulation on their prospects for growth, making this the
biggest threat to growth they face.8
However, the problems do
not correspond to specific regulations, but rather to ambiguity
and confusion.9
Industry players are asking, which regulatory
agencies govern FinTech companies? Which rules do FinTech
companies have to abide by? And specifically, which FinTech
companies have to adhere to which regulations? In particular,
small players struggle to navigate a complex, ever-increasing
regulatory compliance environment as they strive to define their
compliance model. Recent years have brought an increase of
regulations in the FS industry, where even long-standing players
are struggling to keep up.
Figure 19: Challenges for FinTech companies and incumbents
What challenge did/do you face in dealing with FinTech/traditional financial companies?
IT security
FinTech Incumbents
Regulatory uncertainty
Differences in business models
Differences in management culture
Differences in operational processes
Differences in knowledge/skills
IT compatibility
Required financial investments
60% 0%
50% 10%
40% 20%
30% 30%
20% 40%
10% 50%
0% 60%
“Given the volume of FinTech
companies, the big challenge is
sorting through them to find
an appropriate fit.”
largest asset managers in the US
“We are willing to establish a
partnership with or to acquire
a FinTech company.”
Head of MA at one of the largest
banks in Brazil
8 PwC, 19th Annual Global CEO survey, 2016
9 WSJ, Where FinTech is struggling with regulation, 2015

While most FS providers and FinTech companies would agree
that the regulatory environment poses serious challenges, there
are differences of opinion on which are the most significant.
For incumbents, IT security is crucial (see Figure 19). This
highlights the genuine constraints traditional FS organisations
face regarding the introduction of new technologies into
existing systems. On the other hand, fund transfer and payments
businesses see their biggest challenges in the differences in
operational processes and business models. The complexity of
processes and emerging business models, as explained in
Section 1, which aim to lead the payments industry into a
new era, have the potential to both disrupt and complement
traditional fund transfer and payments institutions. Their
challenge lies in refining old methods while pioneering new
processes to compete in the long run.
Just over half of FinTech companies (54%) believe management
and culture act as roadblocks in their dealings with FIs. As
FinTech companies are mainly smaller, they are more agile
and flexible. And, because most are in the early stages of
development, their structures and processes are not set in stone,
allowing them to adapt more easily and quickly to challenges.
Surfing the FinTech wave – How to
ensure your organisation is ready
to take advantage of the FinTech
people opportunity
• Encouraging and incubating innovation:

FIs need to re-learn how to innovate and attract talent
with the right mix of technical and commercial skills. This
involves a mind-set change from traditional leadership-
down management to a model that encourages innovation.
• Adopting a FinTech mind-set:

Big corporate structures are not necessarily the best fit for
success in the FinTech revolution. Established FIs will need
to experiment with new business arrangements (such as
partnerships and joint ventures) to gain access to the talent
and the innovation needed to pinpoint game-changing
products. This involves identifying promising profiles and
developing incentives to attract entrepreneurial talent.
• Creating an agile enterprise:

FinTech start-ups operate in a very different way than
established FS businesses do. They move quickly, fail fast
and are not afraid to take risks. Traditional players need
to think about how this agile mind-set dovetails with their
current business processes and shareholder requirements.
Companies must also be clear about how they incorporate
new ways of working specifically with respect to their value
proposition, e.g. “trying and failing is much better than not
trying at all”. In establishing a new paradigm, firms should
ask themselves the following: How do you ensure that your
culture encourages a progressive mind-set?
• Digitising the employee experience:

Innovative start-ups attract youthful talent with very
different career aspirations than those of the previous
generation. This will necessitate a change in the way
organisations interact with staff, e.g. by redesigning
career paths, offering incentive arrangements, or
outsourcing work to freelancers. HR departments will
need to adapt to new talent acquisition methods, and can
learn a great deal from other industries that have gone
through similar changes (e.g. some big-pharmas teaming
up with bio-tech firms).
• Changing the way talent is developed:

As new technologies enter the workplace, workers’
skills and experience must evolve accordingly. Current
employees need to keep abreast of new skills requirements
and develop themselves to remain attractive to employers.
Because new programming or digitally related skills cannot
be taught formally, it is up to employees to build networks
locally and embrace the emerging trends and technologies.
Talent management frameworks should encourage and
reward this attitude.
• Fostering an attractive employer brand:

Many FinTech start-ups have identified a specific niche or
a purpose they are trying to achieve (for instance: global
financial inclusion, or reducing the cost of money transfers
to access developing markets). Established players need
to take a similar approach to attract the right type of
applicants and develop employer brands that appeal to
aspiring talent. They must also engage with the start-up
environment and strive to develop corporate brands that
are tech-friendly. Minimising these challenges should be
on the agendas of both FinTechs and traditional FIs, as well
as governments, regulators and trade associations in order
to create the best investment environment, regulatory
framework and infrastructure for the development of
FinTech within the FS industry.

Conclusion
Disruption of the FS industry is happening and FinTech is the
driver. It reshapes the way companies and consumers engage by
altering how, when and where FS and products are provided.
Success is driven by the ability to improve customer experience
and meet changing customer needs.
Information on FinTech is somewhat dispersed and obscure,
which can make synthesising the data challenging. It is therefore
critical to filter the noise around FinTech and focus on the most
relevant trends, technologies and start-ups. To help industry
players navigate the glut of material, we based our findings
on DeNovo insights and the views of survey participants,
highlighting key trends that will enhance customer experience,
self-directed services, sophisticated data analytics and cyber
security.
In response to this rapidly changing environment, incumbent
financial institutions have approached FinTech in various ways,
such as through joint partnerships or start-up programmes. But
whatever strategy an organisation pursues, it cannot afford to
ignore FinTech.
The main impact of FinTech will be the surge of new FS business
models, which will create challenges for both regulators and
market players. FS firms should turn away from trying to
control all parts of their value chain and customer experience
through traditional business models, and instead move toward
the centre of the FinTech ecosystem by leveraging their trusted
relationships with customers and their extensive access to
client data.
For many traditional financial institutions, this approach will
require a fundamental shift in identity and purpose. The new
norm will involve turning away from a linear product push
approach, to a customer-centric model in which FS providers are
facilitators of a service that enables clients to acquire advice and
interact with all relevant actors through multiple channels.
By focusing on incorporating new technologies into their own
architecture, traditional financial institutions can prepare
themselves to play a central role in the new FS world in which
they will operate at the centre of customer activity and maintain
strong positions even as innovations alter the marketplace.
FIs should make the most of their position of trust with
customers, brand recognition, access to data and knowledge
of the regulatory environment to compete. FS players might
not recognise the financial industry in the future, but they
will be in the centre of it.
FIs
REGULATORS
RD
PEERS
ONLINE
PLATFORMS
EXPERTS
MOBILE
START-UPS
SOCIAL
MEDIA
APIs

Appendix
Participant profile
Our Global FinTech survey is based on the views of 544
respondents from 46 countries, principally Chief Executive
Officers (CEOs), Heads of Innovation, Chief Information
Officers (CIOs) and top management involved in digital and
technological transformation, distributed among five regions.
They are involved in various segments of the FS industry such
as: fund transfer and payments, asset and wealth management,
banking and insurance, from a majority of large companies,
but also small- and medium-sized ones. The survey also
encompasses other types of companies, such as consultants,
national supervisory and international financial institutions.
Figure 20: Type of companies
Global breakdown
n FinTech company 20%
n Insurance company 14%
n Other* 11%
n
Fund transfer and
payments institution 4%
n Bank 30%
n
Asset management
company 21%
Figure 21: Origin of participants Figure 22: Type of respondents
Source: PwC Global FinTech Survey 2016 Source: PwC Global FinTech Survey 2016
Global breakdown Global breakdown
n Latin America 10%
n North America 10%
n Africa 4%
n
Asia 20%
n Europe 56%
n Head of innovation 7%
n Head of strategy 7%
n COO 4%
n
CRO/Risk manager 2%
n Head of products 2%
n
CDO/Business
development 1%
n
CEO/Board 23%
n
Other** 23%
n Head of IT/Digital/Tech 11%
n
Directors/Head of
department 10%
n CFO 10%
**Other includes portfolio managers and angel investors.
*Other includes consultants, national supervisory and international financial
institutions.

DeNovo’s Team is tracking emerging trends in FinTech to explain which start-ups, technologies, trends and new market entrants are relevant to you and, more importantly, why. The trends highlighted
below are a snapshot in time of the most relevant ones for each FS segment. For an updated view, please subscribe to the DeNovo platform.
Summaries of the trends
Summaries of trends for banking
1. The rise of peer-to-peer (P2P) lending Increased levels of technology have enabled an increase in lending without an intermediary.
2. Services and solutions for underserved consumers Lower cost of providing services to customers that are currently underbanked, e.g. in rural Africa.
3. The enhancement of credit underwriting/decision making More granular data enable FS providers to more accurately assess and price risks.
4.
Solutions that banks will integrate or incorporate to improve APIs enable third parties to develop value-added applications for company platforms, artificial intelligence is enabling companies to extract greater customer and
simplify operations insights, employees and intelligent machines are integrating to work as a team, banks are expediting the deployment of digital delivery. And there are many more
ahead.
5. Sophistication in methods to reach, engage, and retain customers Engaging customers through gamification techniques in a collaborative environment is leading to better customer experience and reflecting in retention.
6. The emergence of self-service tools
Increase of customer autonomy in performing every service without human interaction. Self-service tools, such as internet banking and apps, are becoming more
popular.
7. The move toward non-physical or virtual channels, Virtual banking utilises online and mobile platforms to integrate and simplify customer banking experience. Virtual banking platforms equip customers with on-
including mobile channels demand access to manage bank accounts, pay bills, apply for loans, open new accounts, and perform other banking activities through a single portal. Banks are
using these channels to collect data from customers, generate new revenue streams and offer compelling value propositions.
8. The digitalisation of cash- and treasury-management functions
Cash and treasury management includes the administration of external and internal funds, cash flow management, and corporate finance policies and procedures.
The digitalisation of cash and treasury management functions utilises online platforms to disrupt the traditional models, creating new revenue streams and value
propositions. Cross-border payment transfers for businesses, foreign exchanges and invoice management are a few of the functions that are enabled primarily
through the advent of online platforms. For example, organisations are developing new processes to perform international money transfers using mobile wallets and
cryptocurrencies to improve speed and safety.
9. The democratisation of banking and personal finance
The democratisation of banking and personal finance describes the shift in which customers take control over their financial health and seek new channels and
solutions to assist in this process.
10. The simplification and move toward streamlined product application The consumer product application process (i.e. loan origination) has been streamlined with the emergence of cloud-based lending solutions and electronic bank
processes to improve customer experience account management systems which automate the loan origination process and increase overall transparency in the lending process. The move towards such
solutions improves customer experience by reducing the amount of manual work, cutting down time and reducing errors.
11. The rise of crowdfunding/seed funding New funding options have emerged in mid-market, such as P2P lending and marketplace lending platforms.
12. Blockchain
Use of distributed and decentralised ledger technology in which transactions are recorded in order to improve payments, clearing and settlement, audit or data
management of assets. There is also the possibility to create a so-called “smart contract” using blockchain technology. This is essentially a contract that is
translated into a computer program and, as such, has the ability to be self-executing and self-maintaining.

Summaries of trends for fund transfer and payments
1. Next generation point-of-sale solutions
Novel tech-based loyalty programs improve customer engagement and enhanced technology at the physical POS, such as the use of QR codes or Near Field
Communication (NFC), enhances security of mobile wallets.
2. Increased value-added merchant service offerings
Additional services offered by merchant acquirers and processors including enhanced data analytics, reward and loyalty programs, fraud management, chargeback
protection, check processing, refund management and customer relationship management solutions.
3. Peer-to-peer (P2P) payment solutions and digital wallet
FinTech companies are providing an increased number of solutions to facilitate P2P payment solutions. Increasing adoption of digital wallet for the use of e-money,
secure storage and cryptocurrencies.
4. Alternative retail-payment networks and fund-transfer solutions
These electronic payment networks are alternatives to traditional networks offered by Visa, MasterCard, Discover and American Express. This includes online
payment systems, such as PayPal and Stripe, and loyalty and gift card solutions, such as Starbucks.
5. Proliferation of international/cross-border transfer platforms Increased number of solutions and points of user interaction that enable faster and cheaper cross-border fund exchange or remittance.
6. Simplification of online-checkout experience
The checkout experience can be directly affected by ease of website navigation, delays in transaction processing, volume of security checks, and limited payment
options. New vendors aim to eliminate the multiple inept steps (i.e. shopping cart, card info, etc.) currently required in an online checkout process.
7. Consumer protection from identity theft, fraudulent transactions The use of topological analytics to ensure the authenticity or identify fraudulent transactions.
and account falsification
8. Increased push for faster payments
Companies are focused on the fund transfer and payment space to limit the number of intermediaries for the purpose of faster (to immediate) transfer and/or
settlement and with this, a lower fee. This can include direct party transfer, peer-to-peer (P2P) transfer, use of prepaid account to transfer with a mobile phone and
no bank account.
9. Contactless technology for digital wallets
Non-cash payment methods, such as credit and debit cards, smartcards, or other devices (e.g. mobile phones), that use radiofrequency identification to secure
payments at a physical POS terminal.
10. Blockchain

Summaries of trends for Insurance
1. Ride-sharing solutions
Rise of new ride and car-sharing business models, or similar sharing economies, that demand new insurance solutions regarding liability and personal injury.
2. Usage-based insurance (pay as you go) Personalisation of insurance through usage- and behaviour-based models in auto coverage leverages new ways to capture driving data.
3. New models of holistic advice (robo-advice) New models of holistic advice on insurance/investment needs assisted by automated advisors that leverage advanced analytics and artificial intelligence.
4. Self-directed services Use of self-service tools to reduce cost of serving customers and improve simplicity, transparency, and speed of fulfilment.
5. Connected health and medical advances From wearables to genomics to enable P4 Medicine: Predictive, Preventive, Personalized and Participatory.
6. Connected/Smart Car Solutions for connected cars and increasingly assisted/autonomous driving that impact auto claims frequency and severity.
7. Remote access and data capture Use of non-traditional data capturing solutions including remote devices, to improve risk and loss assessments.
8. Shift from probabilistic to deterministic model Real-time data capture and monitoring technology enabling insurers to shift from a probabilistic to a deterministic claims model.
9. Granular risk and/or loss quantification Advancement in technology helping to quantify risk and/or loss at a granular level.
10. Robotics and automation in core insurance Increased use of capabilities such as robotics and artificial intelligence to automate core insurance functions.
11. Blockchain
Summaries of trends for asset and wealth management
1. Technology to enable investments in new markets Leverage new technologies to gain competitive edge and accelerate growth in new and emerging markets.
2. Automation of asset allocation and wealth management Automated advice solutions (e.g. robo-advisers) are changing the asset management landscape in many ways, including asset allocation.
3. Products and services for traditionally unprofitable customers Alternative distribution models and sophisticated risk quantifying techniques are helping insure previously unexplored/uninsured customer segments.
4. Better identification and quantification of risk New models and use of broader data sets are being used to more accurately analyse risk.
5. Community intelligence networks leading to better investment decisions The use of technology and data from social networks in order to improve investment decisions.
6. Innovation to get to market and scale faster
Increased product offerings and/or synergies among existing products increases market differentiation and challenges traditional techniques, most notably in the
investment banking industry.
7. Innovation in brokerage services enabling better investment Innovations enabling advanced analytics and improved interface enhance decision support. Enhanced brokerage services that provide new data sources and tools
provide advanced decision support analytics, portfolio and market information to enhance investment decision support.
8. Standardisation of customer experience across all points of contact Enable similar functionalities for end users across multiple devices to create streamlined user experience.
9. Alternative distribution and marketing channels for awareness An increasing number of companies are leveraging new distribution channels, such as social media and mobile phones, to reach and engage more customers,
and lead generation resulting in a different economic model for new customer acquisition.
10. End user-created investment solutions Customer-centric investment products are enabling investors to create personalised investment strategies.
11. Shift from technology-enabled human relationships to Rather than maintaining a human relationship with the support of technology services, clients are now directly using the technology with little to no human digital
experiences with human support interaction. Human interaction only comes into play when there is a need for customer service.
12. Blockchain

DeNovo
More than ever, innovation impacts your business. DeNovo
empowers decision makers by instantly translating data,
information and knowledge into the wisdom to adopt the right
business strategies.
What is DeNovo?
DeNovo represents the next generation of strategy consulting –
a new platform powered by Strategy and PwC that is focused
on FinTech. The rapid emergence of disruptive technologies
and new business models requires a modern way of delivering
strategic advice when and where you need it. Whether you are
in the board room or on a phone call with your CEO, DeNovo
provides you with answers in real-time. Relevant content
and insights are delivered to you via web, mobile and direct
interaction with our team of innovation strategists.
DeNovo’s Subject Matter Specialists in FinTech lead a dedicated
team of over 50 strategists, equity analysts, engineers and
technologists. Using both public and proprietary data from
over 40,000 sources and leveraging our global network of over
200,000 professionals, we cut through the noise to explain
which startups, technologies, trends and new market entrants
are relevant to you and, more importantly, why.
Who uses DeNovo?
DeNovo is designed for CEOs, CTOs, Business Unit Heads, Heads
of Strategy, and other key decision makers in FS who need a
trusted resource to understand the emerging trends that impact
their business strategy and what actions to take. http://www.strategyand.pwc.com/denovo

Contacts
Manoj Kashyap
Global FinTech Leader
PwC US
+1 (415) 498 7460
manoj.k.kashyap@us.pwc.com
Steve Davies
EMEA FinTech Leader
PwC UK
+44 (0) 131 260 4129
steve.t.davies@uk.pwc.com
Haskell Garfinkel
US FinTech Co-Leader
PwC US
+1 (312) 298 2647
haskell.garfinkel@us.pwc.com
Dean Nicolacakis
US FinTech Co-Leader
PwC US
+1 (415) 498 7075
dean.nicolacakis@us.pwc.com
John Shipman
APAC FinTech Leader
PwC Australia
+61 (2) 8266 0198
john.shipman@au.pwc.com
Acknowledgment
We would like to thank Dariush Yazdani, Gregory Weber and the PwC Global research team for their involvement in the
development of this report. We would also like to thank Javier Baixas, Barry Benjamin, Jeremy Drane, Menekse Gencer,
Roberto Hernandez,Simon Horner-Long, Andrew Jurczynski, Fergus Lemon, Sarah McEneaney, Stephen O’Hearn,
Aaron Schwartz, Ajit Tripathi, Jamie Yoder, Bhushan Sethi, Stuart Jones and Áine Bryn and the Global FS Marketing
team for their contributions.

pwc.com/fintechreport
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are
committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the
information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability,
responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or
for any decision based on it.
For more information about the global Financial Services marketing programme, please contact Áine Bryn on +44 (0) 20 7212 8839 or aine.bryn@uk.pwc.com.
© 2016 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details.

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