The Future of Finance


Fintech businesses go beyond being a business, we’re on a mission to make finance more transparent. In tech, you can change the world very quickly.

Anil Stocker CEO & Co-Founder, Market Invoice

Technology is transforming the financial sector.
Industry leaders tell us why disruptive innovation is as likely to come from new start-ups as the big players,
and why fintech is now a phrase we'll be hearing more of.

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Finance - but not as we know it

There is a technology revolution in financial services. Taking a cue from industries like life sciences and aviation, which have utilized technology to industrialize processes, reduce costs and meet regulatory requirements, this sector is embracing financial technology - better known as fintech. Technology start-ups are tackling challenges facing the sector: innovation, changing customer demands and increased regulatory pressure. The result? Established players and new entrants are scrambling to compete with, or acquire, these start-ups. Just as iTunes disrupted the music business, digital technology is revolutionizing the financial services industry.

"To evolve these new digital fintech platforms, software development is happening at a dizzying pace," says Guillaume Dufour, Vice President, Financial and Business Services at Dassault Systèmes, the 3DEXPERIENCE company. "Since the 2008 global financial crisis, the financial services industry has had to reaffirm its role as a positive for society and the economy. We are seeing the industry leverage new technologies to rethink both internal operations and the client experience."

Disruptive innovation is occurring across both business-to-business (B2B) and consumer-facing areas of financial services. In the B2B world, new companies have sprung up which handle services such as data management and analysis more nimbly and cheaply than institutions can do it themselves. Organizations like BNP Paribas Security Services are digitizing processes with the aim of achieving cost savings, transparency and a better customer experience. It's an approach Dassault Systèmes endorses. The company hosts an accelerator program, the 3D fintech Challenge, which aims to speed up the pace of innovation in financial services by giving tech start-ups the opportunity to take on real-world challenges.

On the business-to-consumer side, disruptive technology is giving rise to "mobile money" which has the power to change economies. In sub-Saharan Africa, where traditional banking has been hampered by infrastructure problems - and 55 percent of borrowers use only informal sources of credit - mobile banking has expanded to 16 percent of the market. It has also driven an unprecedented explosion in new ways to pay.

Take the mobile money transfer service M-Pesa, which started in Kenya. Users load funds onto their digital accounts by paying cash in to M-Pesa agents, and then send it to recipients via SMS. $11 billion worth of transactions were done this way in 2014 in Kenya alone. The service has been replicated as far afield as India and Romania.

It's not just developing countries using the new technologies. They're also being utilized by Western-originated companies such as Facebook Pay. So-called "digital wallets" are being operated by new enterprises emerging from the fintech space, such as Venmo and Circle. They allow money to be stored, transferred and used online.

The mechanics of finance are transforming at lightning speed.

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The new financial order

Transparency for investors

Transparency for investors

With interest rates at record lows, we are seeing a new breed of investors emerge. Whether sitting at home or working in a financial institution, investors want to know where their money is and how hard it's working. This demand for transparency is only set to increase. In the digital age financial transactions have become quick, simple, direct – anytime, anywhere.

Crucially, investors are also being offered lower entry points. The low-cost online investment service Nutmeg is one of the companies that hopes to make investing easy and – with modern, interactive graphics that build the customer's risk profile – even fun. CEO Nick Hungerford says: "We have the opportunity with new technology to democratize financial services, to make something that was previously only available to the very wealthy, available to everybody."

It's an exciting time for fintech and one in which speed-to-market is a differentiator. Dassault Systèmes' Dufour says: "Innovation isn't just about having the right ideas, but about excelling at execution to transform the best ideas quickly into customer-centric solutions."

There are digital currencies such as bitcoin, which have the potential to transform the mechanics of moving money by lowering transfer costs. They can also be a new important factor in reducing money laundering. The downside is that currently there is no authority guaranteeing bitcoin's value. "The best type of payment is one you don't see. That's the future of spending money," says John Lunn, global director of PayPal Developer.

Regulators are demanding more transparency and openness and this, in turn, is driving some of the biggest innovation. Collaboration with fintech companies is lowering regulation costs and enhancing compliance. The London-based software company Open Gamma, for example, helps financial services firms to manage risk transparently by making every code and calculation available to all users.

In addition to cost-saving efficiencies, the sector is seeing a vast explosion in data-processing and analytics, giving investment managers and their clients speedy access to new forms of information wherever they need it. Some of this is pushing cybersecurity innovations such as better encryption and other forms of protecting data in transit and at rest.

The investing landscape has changed. There are more investors than ever, using a range of exciting new platforms to give them easy and clear access to their investments. The pace of technological innovation is likely to increase.

So, ignore fintech at your peril.

Unprecedented profits

Unprecedented profits

According to Accenture, the value of the global fintech sector is set double to over $8 billion by 2018.

These video/article/infographic were created
by CNBC Creative Solutions in partnership with Dassault Systèmes.