Summary
Highlights
Henri Arslanian introduces the audience to the FinTech revolution, describing it as one of the biggest transformations in financial history. He predicts it will have significant impacts on financial centers like Hong Kong and will particularly affect those working in the financial industry, changing the required skill sets and personalities of future bankers.
FinTech, or financial technology, is defined as the innovative use of technology in designing and delivering financial services. Examples include AI, peer-to-peer lending, blockchain, and robo-advisors. The speaker explains that the 2008 financial crisis diverted banks' attention from innovation, creating a gap that FinTech companies and non-traditional players like Facebook and Amazon are now filling by offering user-friendly and convenient financial solutions.
Technology giants like Facebook, Amazon, Alibaba, and Tencent are increasingly involved in financial services, obtaining regulatory licenses and offering products that compete with traditional banks. For instance, Alibaba's financial arm launched a money market fund that became the world's third-largest, and WeChat facilitates billions of transactions and offers a wide range of services. Arslanian suggests that future bank accounts might be opened with tech companies rather than traditional banks, as these firms already have customer trust and daily touch points.
Thousands of FinTech startups are now offering specialized financial products like peer-to-peer lending and robo-advisory services, which are more transparent and cheaper than traditional bank offerings. These newcomers focus on profitable front-end services, leaving the less glamorous back-end functions to traditional banks. This could lead to a new banking model where traditional banks become commoditized utility providers to tech firms and FinTech startups controlling the customer experience.
The FinTech revolution also brings positive developments, most notably financial inclusion. Over 2 billion people worldwide are unbanked, a problem existing in both developing and developed countries. FinTech is helping to address this, with 700 million people becoming banked in the last five years. Consumers will benefit from improved user experiences, greater access to services, and cost savings through innovations like AI-powered chatbots, biometric security, embedded banking in IoT, and gamified financial services for millennials.
Banks are concerned about these changes, and many are struggling to adapt to a culture of innovation. Citi Bank estimates that 30-50% of banking jobs will disappear in the next decade due to automation and new models. While new jobs will be created in FinTech, they will be fewer and require different skills (e.g., creative designers, programmers). To prepare, there needs to be a fundamental change in mindset, encouraging entrepreneurship over stable bank jobs, and a reform in education. University curricula should integrate design thinking, coding, and product development to train future bankers who will be designers, programmers, and creative thinkers.