Mapping FinTech use cases

FinTechs are approaching complex front-, middle, and back-office tasks. Based on technological trends, EY and Innovate Finance categorise affected functions and identify grounds for collaboration.

Based on powerful innovations, the FinTech industry is growing at a rapid pace and captures market shares from incumbents in many areas of financial services - not just in the retail segment where FinTechs started to manage payments, source funding by means such as crowdsourcing or peer-to-peer lending, and offered investment services. In today’s FinTech world, the innovative start-ups are approaching more complex capital market tasks. In a new report, EY and Innovate Finance analyse the FinTech landscape across the globe and assess how incumbents can work together with FinTechs to achieve better returns for their clients and firms.

“Today, innovation in capital markets is no longer an option, but an absolute imperative, for investment banks to survive and thrive into the future,” says the report. While FinTechs in the retail segment have often been a competition to capital markets, higher barriers to entry in capital markets make FinTechs and incumbents better of when collaborating. Thereby, an investment bank’s structural costs can be reduced, and regulatory compliance and customer service can be enhanced.

Based on nine technology-enabled trends from cloud computing to the internet of things, innovations in capital markets are made much easier. Thereby, FinTechs can transform functions across financial service companies. The report summarises those use-cases according to their underlying technological trend, assuming that cloud computing and process and service externalisation are universal trends applying to all functions: