Major tech companies biggest threat to banking sector: WEF
Technology businesses like Amazon, Google and Facebook are the biggest competitive threat to the banking industry, as they dominate the market for cloud, artificial intelligence and big data services, according to a World Economic Forum report. In contrast, fintech firms have driven innovation but only account for a small share of the financial services market. Major financial companies already rely on Amazon Web Services, for example, and some banks have apps that let customers perform routine transactions on Facebook. Tech giants could exploit the financial sector's reliance on them and leverage their own huge data sets, the report noted.
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For years Fintech has been the hottest topic of discussion in financial services, with incumbents, regulators, and consumers all asking the same question: “Will small technology-enabled ‘fintech’ start-ups redefine the way that banks and insurers operate, and upend the competitive landscape of the industry?”



Building on the findings of the 2015 World Economic Forum report “The Future of Financial Services,” this document considers the evolution and impact of fintech firms on financial services to date and presents a series of contrasting outlooks for the future of the industry.



Our findings suggest that fintechs have materially changed the basis of competition in financial services, but have not yet materially changed the competitive landscape. They play a critical role in defining the pace and direction of innovation across the sector but have struggled to overcome the scale advantages of large financial institutions.



Other key findings of the report include:

• Platforms Rising: Platforms that offer the ability to engage with different financial institutions from a single channel will become the dominant model for the delivery of financial services.

• Financial Regionalization: Differing regulatory priorities, technological capabilities, and customer needs are challenging the narrative of increasing financial globalization and making way for regional models of financial services suited to local conditions.

• Systemically Important Techs: Efforts by incumbent financial institutions to emulate the core capabilities of large technology firms will lead to an increasing reliance on those same large technology firms.



This report represents the culmination of three years of research into the transformation of financial services prepared by the World Economic Forum in collaboration with Deloitte.