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Capgemini highlights fintech growth

Nov 17
Tags: Capgemini
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Capgemini highlights fintech growth

The ongoing growth of the fintech sector is a trend that is likely to affect all consultants and professionals working in financial services over the coming years.

According to the first World Fintech Report (WFTR) from Capgemini and LinkedIn, half of banking customers around the world are now using the products or services of at least one fintech firm.

These companies are generally less than five years old and have a relatively small but expanding customer base. Their business models are often based on using the latest technologies to challenge traditional practices and offer new services in the finance industry.

While fintechs are growing in size and prominence, the WFTR noted that their influence is most notable among young, tech-savvy and more affluent customers. It also revealed that the highest rates of adoption of fintech services are in emerging economies, such as China, India, the UAE and Hong Kong.

Investment management is one area where fintech firms have made particularly strong progress, with 17 per cent of customers relying solely on these providers and more than a quarter (27 per cent) using fintechs in addition to traditional investment managers.

Nearly half (46 per cent) of fintech customers are using services from more than three firms.

The research also found that only 24 per cent of customers have full trust in their fintech provider. This compared to 37 per cent for traditional financial institutions, which were found to have an advantage over fintechs as far as fraud protection, quality of service and transparency are concerned.

Penry Price, vice-president, marketing solutions at LinkedIn, said: "Rising customer expectations for more personalised and advanced digital experiences, advancements in technology, greater access to venture capital and lower barriers to entry have created fertile ground for growing fintechs.

"Fintechs are largely gaining momentum by meeting needs traditional players have yet to address, but many fintechs lack the transparency required to earn the trust of their consumer audiences to capitalise on these opportunities."

China - the dominant force in fintech?

In a recent report published by investment firm H2 Ventures and KPMG, China dominated the list of leading fintech companies from around the world, with four of the top five.

Hangzhou-based Ant Financial took top spot ahead of Qidian, while Lufax and ZhongAn were fourth and fifth respectively. American health insurance start-up Oscar was in third place, while the UK's Atom Bank was sixth and Kreditech of Germany seventh.

The study also included a list of 50 'emerging stars', which featured growing fintech companies from 19 countries. Markets like Chile and the Philippines made their first appearance in the ranking this year.

Discussing the latest trends in the fintech market, Chia Tek Yew, head of financial services advisory at KPMG in Singapore, said it was interesting to see these firms evolving from being focused "product disruptors" to "fully fledged financial players".

He added: "One example is Ant Financial, which started as Alipay to help with payments within the Alibaba marketplace and is now a player that provides multiple products such as deposits, loans and assets under management."

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