The next step of open innovation to create and capture value for sophisticated clients and businesses in the banking, wealth and asset management industry are cross-sector ecosystems.

Sharing information and knowledge, co-innovating with clients, communities, and competitors, and collaborating with diverse players is the new reality in the digital world. All these characteristics converge with the current disruptive trends.

Leaders must embrace latest technologies, focus on the entire client journey and at the same time cope with challenges such as emerging growth regions in Asia, demographic shifts, intergenerational wealth transfers, and comply to increasing regulations.

• New growth regions
  
• Wealth transfer
• Demographics
• New market entrants

• Sophisticated clients
• Decreasing loyalty
• Digitalisation/mobility

• Cross-border compliance
  
• Capital requirements
• Banking secrecy
• Fintech/shadow banking

• Cognitive technologies
  
• Robo-advisors
• Crowdfunding
• Blockchain

FINANCIAL SERVICES

DISRUPTIVE TRENDS

Infographic focus

The next step of open innovation to create and capture value for sophisticated clients and businesses in the banking, wealth and asset management industry are cross-sector ecosystems. Sharing information and knowledge, co-innovating with clients, communities, and competitors, and collaborating with diverse players is the new reality in the digital world. All these characteristics converge with the current disruptive trends like cognitive intelligence, robo advisors, crowdfunding, and blockchain. Leaders must focus on the entire client journey and at the same time cope with challenges such as the rise of emerging growth regions in Asia, demographic shifts, and wealth transfers from baby boomers to millennials and comply to increasing regulations.

learning

understanding

+

=

Data mining

Artificial Intelligence

Cognitive

Technology

Computer vision

Robotics

Pattern
recognition

Machine learning (ML)

Natural language
processing (NLP)

Rest

$12bn

$58bn

2017

2021

AI spendings¹

+21% CAGR

ML & predictive analytics market growth²

+200% ML pilots & implementations³

China

North America

Europe

Rest

Robo advisors

• Fully-automated investments, self-learning
  algorithms, automatic rebalancing
  

• Hybrid robo solutions (combination of digital
  and personal components)

• Incumbents are launching inhouse solutions
  and/or take over robo advisors

• Increasing collaboration between banks and Fintechs

• Penetration to rise from 0.5% in 2018 to 2.3% in 2022

2017

99%

traditional

0.5% robo advisors

Market share US robo advisors (US$ 720bn)

Vanguard

Schwab

Wealthfront

Betterment

Peer-to-Peer

~80% of millennials may switch their advisor after the wealth transfer

• Alternative financing is constantly increasing with more than 2,000 platforms available as of today
  

• Millennial small business owners are five times more likely to get their business funded with crowdfunding

• China reached the highest cumulated transaction value for crowdinvesting in 2018 with US$ 9bn

Crowdfunding (reward-based)

Crowdinvesting (equity-based)

Crowdlending

• Millennials are ten times more likely to use digital lending compared to the baby boomers

• Traditional banks are threathenend by crowdlending as this is potentially the most disruptive of all new models of finance

• China reached the highest transaction value for crowdlending in 2018 with US$ 348bn, followed by the U.S. (US$ 21bn) and the UK (US$ 4bn)
  

Blockchain

Cryptocurencies

• Market cap US$ 381bn as of May 2018

• 1,600 crypto currencies

~80% of millennials may switch their advisor after the wealth transfer

• Cross-border payments (cheap and fast)
  

• Equity trading (accurate, short settlement process)

• Supply chain management (efficiency gains)
  

• Smart contracts (automated with less intermediation)
  

• Company funding via Initial Coin Offering (ICO)

• Loyalty and reward programmes
  

• Digital online identity management
  

• New asset class for wealth management

SECURITY

IMMUTABILITY

DISTRIBUTED

PERMISSIONED

See also infographic on Market Trends

All sources noted in Fasnacht, D. (2018) Open Innovation Ecosystems: Creating New Value Constellations for the Financial Services. Springer, Berlin.

Notes: PWC; ¹ IDC; ² Forrester; ³ Deloitte