Fintech New York: Partnerships, Platforms and Open Innovation
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The report highlights the burgeoning role of fintech in driving innovation within the financial services sector, particularly through partnerships and open innovation. In 2014, U.S. fintech investments surged to $9.89 billion, with New York emerging as a key player in areas like payments, lending, and wealth management. It emphasizes a digital transformation in finance, driven by technologies such as blockchain and automated advisory services, as firms seek to adapt and compete in a rapidly evolving market.
Fintech New York: Partnerships, Platforms and Open Innovation
- 1. Fintech New York: Partnerships, Platforms and Open Innovation Report released at the Fintech Innovation Lab’s Fifth Annual Demo Day Event New York, New York
- 2. Opportunity: The rapid pace of digital technology innovation has led Banks and other FIs to look towards the financial technology (Fintech) community to help drive innovation from outside and within their organizations. This approach is referred to as Open Innovation • The goal: create a broader value proposition for customers that includes both financial and nonfinancial services, delivered in a ‘magical’ customer experience • The need: new technologies to help cut costs, integrate with new services, comply with regulations and security needs, and compete more effectively with new digital disrupters entering the market • The solution: Platforms, partnerships and open innovation The Financial Services Industry: Embracing the Potential of Fintech Copyright © 2015 Accenture and Partnership Fund All rights reserved. 2
- 3. Copyright © 2015 Accenture and Partnership Fund All rights reserved. 3 • The value of Fintech investments in the U.S. soared to $9.89 billion in 2014, up from $3.39 billion in 2013 • Over the past five years, Fintech investment has had a compound annual growth rate of 56.6 percent, from $1.64 billion in 2010 • This 191 percent increase dwarfs the increase in 2013, when Fintech deal values in the United States climbed 68 percent • In New York, Fintech deal values grew by 32 percent in 2014, to a new high of $768 million Fintech Investment in the U.S. Nearly Tripled in 2014
- 4. Copyright © 2015 Accenture and Partnership Fund All rights reserved. 4 • Hot areas for Fintech investment in 2014: payments, lending, trading technologies, and wealth management • Opportunities in B2B payment space: reducing friction in cross-border invoicing and building new tools for payments within the sharing economy • Trends in lending: disruptive companies have filled the void as banks have pulled back from making loans • Automated advisory: For less complex protfolios, automated investing is replacing traditional, labor-intensive processes with algorithms, bringing more sophisticated advisory services to a historically underserved sector Where the Money is Going
- 5. Copyright © 2015 Accenture and Partnership Fund All rights reserved. 5 New York is Attracting More Venture Investments Into Wealth Management and Markets • More than four of every 10 (42 percent) Fintech deals in New York in 2014 were in one of the previously mentioned hot areas: payments, lending, trading technologies, and wealth management “For Fintech entrepreneurs, New York provides key advantages that no other city can match – close access to potential customers and a deep talent pool of individuals with an intricate understanding of the financial services industry.” — Maria Gotsch, President and CEO of the Partnership Fund for New York City and Co-founder of New York Fintech Innovation Lab
- 6. Copyright © 2015 Accenture All rights reserved. 6 Next Big Trends for Financial Services Firms More Sophisticated Advisory Services to a Wider Variety of Clients • Paradigm shift: from managing customer relationships via one-to-one communications to automated advisory services • Algorithms: for less complex portfolios, replacing traditional, labor-intensive processes with automated algorithms that determine the best portfolio for the investor • Automation: established financial advisory firms (e.g., Charles Schwab and Vanguard) are embracing automated investing advisory as a complement to their traditional services “Even very sophisticated institutions are just now starting to realize the depth and complexity of Fintech, and they want to do more.” – Robert Gach, Managing director of Accenture Strategy Capital Markets and co-founder of the New York FinTech Innovation Lab Copyright © 2015 Accenture and Partnership Fund All rights reserved. 6
- 7. Next Big Trends for Financial Services Firms Distributed Ledger, Cybersecurity and Operational Transformation • Blockchain: strong growth is expected over the next 18 months in this underlying distributed-ledger technology that currently supports Bitcoin o As a stand-alone technology, Blockchain has the potential to help banks, credit card companies, and clearinghouses collaborate, creating safer, faster accounting and optimizing use of capital by reducing counterparty risk and transaction latency • Cyber security: investment is also likely to increase significantly in the coming year, especially in light of broad media attention surrounding recent large-scale data breaches • Operational transformation (insurance): facing digital disruption, innovative startup companies are working with insurers to help transform their operations o U.S. insurers lose $5.8 billion annually as a result of consumers switching carriers o To address a challenging customer base, insurers have started to tap the innovations within the Fintech community o More than four in 10 insurers (43 percent) are either planning to buy, or already have bought, a Fintech startup Copyright © 2015 Accenture and Partnership Fund All rights reserved. 7
- 8. Copyright © 2015 Accenture and Partnership Fund All rights reserved. 8 Conclusion: Complete Digital Transformation of Financial Services is Imminent • We are in the midst of a major disruption in the financial services that will see increasing adoption and evolution of disruptive FinTech solutions • Application programming interfaces (APIs) and similar gateways for quick, reliable and secure information exchange between organizations will enable banks to build out a diverse ecosystem of partners, bringing a broader range of products and services to their customers • Banks and insurers are now aggressively pursuing digital transformation in various forms, from partnerships, to accelerators and innovation labs, to acquisitions to strategic investments • The industry is shifting its focus, moving away from large, mandated tech investment to meet regulatory requirements to investing in disruptive digital technologies that embrace new ideas and create fast- moving centers of innovation Copyright © 2015 Accenture and Partnership Fund All rights reserved. 8
- 9. For More Information Read the full report: Fintech New York: Partnerships, Platforms and Open Innovation Visit: http://www.fintechinnovationlabnyc.com /11139.aspx Copyright © 2015 Accenture and Partnership Fund All rights reserved. 9