From blockchain, to application programme interfaces (APIs), artificial intelligence, robotics, the Internet of Things or digital currencies, a white paper by Juniper Research looks at some of the financial technologies (fintech) that are in the ascendant this year and picks three that are already having an impact on financial professionals.
The research firm asked how each of the technological innovations now being tried and tested by fintech companies are affecting consumers and businesses, how they are affected by regulatory barriers and looked at the maturity of shared industry standards for each type of technology. The researchers also took into consideration security concerns, quality of user experience and the readiness of the ecosystem to use the technologies in practice.
3 most disruptive financial technologies
The researchers selected the following top three disruptive technologies and discussed how they will impact stakeholders:
1. PSD2 and open APIs
When the revised Payments Services Directive (PSD2) comes into effect in January 2018, it will usher in what Juniper Research calls “one of the biggest changes in years” for the fintech industry. Under PSD2, banks will be required to allow trusted third party payment providers (TPPs) to access customer accounts (when the customer has given authorisation) through APIs. The TPPs can be payment initiation service providers (PISPs) or account information service providers (AISPs).
CTMfile has covered PSD2 and APIs extensively:
- PSD2: questions raised by corporate payment SCA exemption
- Open APIs are six months away, what are the practical challenges?
Juniper makes several points about the opportunities for fintech:
- In the case of AISPs, it is possible that third party applications could replace those of incumbent players, further redefining the relationship between the bank and its customers.
- PISPs will be able to access and transfer funds from a consumer’s bank account via TPPA regulation to a merchant holding account directly, without either:
- revealing the user’s bank details at any stage of the transaction, in similar fashion to PayPal at present; or
- requiring users to have an online or mobile wallet, such as PayPal.
- Meanwhile the merchant will stand to gain monetarily, in that PISP-enacted payments will not be subject to any card fees. It is therefore likely that at least some of the savings incurred by the merchant can be passed on to the consumer, resulting in lower prices and thus higher volumes.
This “sub-sector of the fintech industry” and some of the opportunities according to Juniper include:
- Start-ups and established providers can make use of this developing sector to deliver a range of services and improvements to business such as:
- legislation/regulation gap analysis tools;
- compliance tools;
- health check tools; and
- management information tools.
- There are also opportunities for multinational tech firms – the research gives the example of IBM's Watson, which offers cognitive compliance, reducing the huge labour costs faced by businesses and effectively streamlining operations.
- Juniper's white paper states that chatbots, using artificial intelligence (AI) have the potential to one day replace the tasks of some human workers, with programmes that are sophisticated enough to hold fluent conversations with human users.
- It also notes that “chatbots are becoming increasingly influential in day-to-day life” – think of customer services and banking transactions.
- Chatbots are potentially useful in the retail industry to drive consumer loyalty, with an emphasis on personalised experiences and tailored offers.
- Juniper also foresees that, in future, many call centre workers will be made redundant as chatbots are increasingly able to handle more complex enquiries in a manner that appears to flow as a natural human to human conversation – providing a significant opportunity to reduce costs related to customer service and call centre operations.
See here for more about Juniper Research's exploration of disruptive fintech: Top 10 Disruptive Technologies in Fintech.
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