FinTech revenues to rocket over next five years

Revenues generated by FinTech platforms will soar from around $263bn (£231bn) today to $638bn by 2024 as customers become more accepting of artificial intelligence (AI).

WEDNESDAY 22

FinTech revenues to rocket over next five years

That is according to analysis by Juniper Research, which said that FinTech would become the “new normal” and fundamentally change how financial services are delivered.

Smart contracts, loan underwriting using AI to analysis non-traditional data, and personalised insurance based on the internet of things (IoT) are all set to become mainstream.

For insurance specifically, Juniper Research highlighted how actuaries used to manually calculate risk for insurance, and that customers would rarely cancel policies at renewal.

“However, the market is now vast, with consumers and businesses able to insure almost anything rapidly over the Internet,” the researchers explained. “Risks can be better understood as technology can thread together disparate factors to evaluate and price risk effectively.”

The report explains how incumbents are now attempting to replicate and partner up with FinTech firms.

Nordic insurer Tryg is mimicking FinTech approaches by opening an innovation hub in its Copenhagen headquarters, while Prudential has launched its PRU Fintegrate Partnership Programme.

Meanwhile, Allianz Italy’s Allianz1 allows customers to build their own products from the company’s portfolio of P&C, life and health insurance lines, which can be amalgamated into a single policy.

The researchers argued that incumbents use these strategies to appeal to users outside their normal target audience, such as millennials, to secure future revenue streams.

However, it is thought that direct entry, beyond partnerships, remains unlikely in the medium term because of heavy regulatory burdens introduced after the financial crisis.

“The distinction between the FinTech suppliers and traditional incumbents will blur in the 2020s,” said research author, Michael Larner. “Digital engagement will become the norm.

“The winners will be those that provide personalisation allied to an outstanding customer experience’.

 

Image credit | iStock

Most popular

  1. Cyber incidents top ranking of business risks in 2020

    An increasing reliance on data and IT systems has seen cyber incidents shoot to the top of the most pressing risks facing businesses worldwide, research by Allianz has uncovered.

     

    Friday 17

    17 January 2020

  2. Risk managers overwhelmed by new technologies

    The majority of risk managers worldwide cannot adequately assess the threats posed by new technologies, research by Accenture has found.

    10 December 2019

  3. Blockchain to save financial services firms $7bn by 2024

    Financial institutions will save $7bn (£5.43bn) by 2024 thanks to blockchain technology and the automation of customer checks, a market research firm has predicted.

    05 November 2019

White paper

  • Quarterly InsurTech Briefing Q1 2017

    Why InsurTech? A Pressured Insurance Value Chain

    By Andrew Sagon, Andrew Johnston and Matthew Wong

    InsurTech is a burgeoning phenomenon that is modernising the insurance industry. It is disrupting the traditional value chain whereby insurers offer loss protection, and shifting the emphasis to risk mitigation. Incumbents face disintermediation as investors in search of higher yields pour money into insurance-linked instruments in the capital markets. And entrepreneurial businesses are targeting friction costs and inefficiencies within every aspect of the traditional value chain.

     

     

  • Insurance big data – float like a butterfly, sting like a bee

    Nimbleness and agility will unlock potential

    By Elinor Friedman, Andrew Harley and Klayton Southwood

    Recent Willis Towers Watson surveys in the U.S. have shown that P&C and life insurers in developed markets are taking seriously the potential of big data and predictive analytics to improve their businesses. Nimbleness and agility, rather than brute force, are likely to be key to realizing that potential.

    Download PDF

  • The new era of insurance analytics

    Driven by technology, toolkits and talent

    By Claudine Modlin and Graham Wright

    Advanced analytics is helping some insurers offer innovative products and solutions. What do insurers need to know about the changing nature of analytics and whether it is worth the investment? Claudine Modlin and Graham Wright discuss technology, toolkits and talent — topics that may help you decide.

    Download PDF

  • How can we manage the dynamic nature of cyber-risk?

    Risk transfer is part of a comprehensive solution

    By Adeola Adele, Patrick Kulesa, Kevin Madigan and Alice Underwood

    Given the dynamic nature of cyber-risk, taking a multidimensional approach that integrates board governance, technology solutions, behavioral change and risk transfer solutions can help reduce risk to a manageable level.

    Whitepaper Form