THE NEXT DECADE IN FINTECH
hOW TECHNOLOGY WILL TRANSFORM THE Financial SECTOR
The financial sector exemplifies the huge benefits that come from embracing innovation and digital disruption, but staying on the cutting edge of progress demands constant evolution.
The Next Decade in Fintech explores the technologies reshaping the financial sector and looks at how the structure of financial institutions and the delivery of its services are evolving.
While not new, AI is one of the key drivers of change and could boost productivity and cut costs. The use of distributed ledger technology is creating new products and services such as central bank digital currencies (CBDCs) that could bring the unbanked to the financial mainstream. And the use of biometrics authentication promises to enhance the security available to users. While quantum computing remains beyond the next decade, it could have wide-ranging benefits to financial institutions but also leave the sector exposed to a higher level of cyberattacks.
So, while digital transformation of financial services offers many advantages, it also creates new vulnerabilities.
The legal view
"Fintech and digital transformation are transforming the business models of financial institutions; the need to increase the return on capital and reduce costs in the face of investor and competitive forces are causing financial institutions to invest in new technologies. As a result, these technologies are reshaping how financial institutions deliver services, earn revenue and monetize value.
Increased dependency on technology is making businesses more vulnerable to IT malfunctions or criminal attack, consequently the importance of operational and cyber resilience is growing. The Next Decade in Fintech reflects the views of
experts from Baker McKenzie's global financial institutions practice and the financial sector generally as they set out the drivers of change, together with the opportunities and risks they bring."
Emmanuel Hadjidakis | Chair of the Global Financial Institutions Group
Emmanuel Hadjidakis | Chair of the Global Financial Institutions Group
Explore key insights to help you prepare for the future
Why Banks Are Cautious About Fintech M&A
Acquiring technology may be cheaper and quicker than developing it in-house, but traditional banks are wary of overpaying and cautious about the risks inherent in innovative business models.
Discover why banks
are cautious
Biometrics in Financial Services
Will biometrics be a game changer in the race to fortify the financial ecosystem against fraudsters?
Find out what the verdict is
Find out what the verdict is
Central Bank Digital Currencies
Central banks in all the world's major economies and many others are exploring the creation of digital currencies, with a handful of emerging economies having already launched their own.
Understand what it means for financial inclusion
Modular Financial Services
Digital technology promises the modularization of many services — characterized by the involvement
of multiple new market entrants at different points of the value chain, where previously there was a single service or product provided by one entity.
Explore what the future of
financial services could look like
Explore what the future of
financial services could look like
Quantum Computing
Quantum computing remains under development, but because it promises to be a game changer for business, financial institutions can no longer ignore the benefits and risks
it entails.
Financial Stability
For all the benefits fintech has introduced it has also exposed the financial system to new vulnerabilities. These interconnected risks include destabilizing factors, raising questions about the financial systems’ fragility.
Weigh up the benefits
versus risks
Weigh up the benefits
versus risks
Our Fintech Expertise and Capabilities
Cloud Compliance Center
Cloud Compliance Center
Global Financial Services Regulatory Guide
Global Financial Services Regulatory Guide
"The combination of banks' customer data with start-ups' digital strengths has brought a number of innovative new services to the market in areas such as mobile payments."
Andre Gan | Head of Corporate Commercial and Securities Group |
Wong & Partners, member firm of Baker McKenzie International
"Some third parties are not licensed. This raises questions over consumer protection, prudential sufficiency and potentially,
market conduct issues."
Karen Man | Financial Services
Regulatory Partner
"Only a small handful of dominant market players will have the capital to invest not just in collecting and analyzing that data,
but in actually doing something with [artificial intelligence]."
Bradford Newman | Dispute Resolution Partner
"There is a concern over future cyber security and resilience if there is no investment in [quantum] systems, and the National Cyber Security Center in the UK has previously warned that firms should be considering now already how to protect their data from
quantum powered threats."
Mark Simpson | Financial Services Regulatory Partner
"[The system must be interoperable] not only [to] foster inclusion, but also a competitive environment where private sector companies — banks and merchants — can both interoperate with the CBDC and compete among themselves to drive down the prices of services to individuals."
Ashlin Perumall | Financial Institutions Partner