{"id":193990,"date":"2017-08-23T08:01:31","date_gmt":"2017-08-23T06:01:31","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=193990"},"modified":"2017-08-23T08:01:31","modified_gmt":"2017-08-23T06:01:31","slug":"google-and-facebook-a-bigger-threat-to-banks-than-fintech-startups","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/it-services\/193990\/google-and-facebook-a-bigger-threat-to-banks-than-fintech-startups\/","title":{"rendered":"Google and Facebook a bigger threat to banks than fintech startups"},"content":{"rendered":"

Financial institutions\u2019 drive to become more \u201cexperience-driven\u201d is opening the door to potential competition from global technology giants, according to a report published by the World Economic Forum.<\/p>\n

The report, Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services<\/a>, found that large technology firms are hollowing out the value proposition of banks and insurers by carrying out more core functions, even as banks and insurers lean ever more heavily on them to compete.<\/p>\n

It also found that fintech startups, while achieving success in terms of changing the basis for competition, have had less impact than expected in disrupting the competitive landscape.<\/p>\n

\u201cThe partnership between banks and large tech companies risks not staying a reciprocal one,\u201d said Jesse McWaters, lead author of the study, and Project Lead, Disruptive Innovation in Financial Services at the World Economic Forum.<\/p>\n

\u201cFinancial institutions increasingly rely on technology firms for their most strategically sensitive capabilities, but can so far only offer their ongoing business in return.\u201d<\/p>\n

The report draws on interviews and workshops with hundreds of financial and technology experts. It highlights cloud computing, customer-facing artificial intelligence and \u201cbig data\u201d customer analytics as three capabilities that are becoming critical to the competitive differentiation of financial institutions.<\/p>\n

All three are domains where technology giants like Amazon, Google and Facebook have far deeper experience than their financial services counterparts and where scale effects will make it difficult for financial institutions to catch up.<\/p>\n

As a result, many banks and insurers are turning to technology firms to provide these core functions, the WEF said.<\/p>\n

Examples include:<\/p>\n