Abstract
The recent increase of robo-advisory services (RAs) in various financial domains has caused a threatening alarm to the traditional fund and wealth management industry. There has been a remarkable growth in RAs' assets under management (AUM) due to their ability to provide better expected return by being competitive on pricing, transparency, and services. The research paper is designed to explore the various experts in the financial industry (which includes VP and AVPs of investment bank, managers and senior executive at bank, IT professionals and executives, and FinTech entrepreneurs and CEOs) and perceive the digital disruption that is going to affect the traditional financial services industry. Secondly, it is to explore the various strategies that are being adopted by the financial service providers to withstand competition from the disruption caused by FinTech challengers. Moreover, the purpose of this research paper is also to understand the extent and effect of the disruption as well as the strategies adopted by financial industry players to face these disruptions from FinTech.
Highlights
According a report published by Forbes at the end of 2015, it was concluded: “The banking industry is ripe for change with the rise of fintech start-ups, the growing popularity of blockchain technology, and the dominance of millennial (Sorrentino, 2015).” Fintech are termed a game changers as they are revolutionizing the way financial services are provided to its customers with more convenience, transparency and low costs being its primary differentiators (Arner, Barberis, & Buckley, 2015; Chuen, Lee, & Teo, 2015)
Fintech challengers includes some of the new age innovation that includes crypto currencies and blockchain, Robo advisory services backed by Artificial Intelligence (AI), equity crowd funding, peer-to-peer (P2P) lending and mobile payment systems (Philippon, 2016)
We proposed to identify strategies that enable collaborative ecosystem in a way addressing the need of bank and fintech.We intend to focus on digitalization in the financial service industry and with a literature review on rise of fintech and theories of substitution and disruption
Summary
According a report published by Forbes at the end of 2015, it was concluded: “The banking industry is ripe for change with the rise of fintech start-ups, the growing popularity of blockchain technology, and the dominance of millennial (Sorrentino, 2015).” Fintech are termed a game changers as they are revolutionizing the way financial services are provided to its customers with more convenience, transparency and low costs being its primary differentiators (Arner, Barberis, & Buckley, 2015; Chuen, Lee, & Teo, 2015). According to PwC (2016), fintech is defined as “the segment that is at the intersection of the financial services and technology sectors where technology-focused start-ups and new market entrants innovate the products and services currently provided by the traditional financial services industry”. According to the author, Catalini, Halaburda,King, and Vergne (2017) fintech is defined as “a movement toward the digitization, decentralization, and disintermediation of economic transactions, powered by information technologies such as peer-to-peer networking, big data analytics, machine learning, blockchain technology, and open APIs.”. Soon, robo advisors would become a necessity to continuously sort, classify and analyze the data as Artificial Intelligence (AI) can compute large data with a lot of ease.AI can make it feasible to extend the financial advisory services to masses at a lower cost
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