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Fintech: Challenges and opportunities for the financial industry

Digitalisation is fundamentally changing the financial industry. The pandemic has intensified the digital transformation. Interactions with companies were suddenly only possible on digital channels. It is becoming apparent that the use of new technologies and digital services in finance will continue to gain momentum.

 

From Marianne Bonato
Member of the Executive Board, AZEK und SFAA

 

Leveraging the emergence of fintech ecosystems

Fintech innovations enable new business models and solutions. New competitors are developing technology-based offerings that replace traditional banking processes and eliminate the corresponding revenues for banks.

However, the change also offers opportunities and new sources of revenue for banks. Unlike start-ups entering the market, banks are mostly established players with trusted brands and a broad product portfolio. Thanks to their large customer base, they benefit from economies of scale in the implementation of new digital solutions. In order to keep up with the agile start-ups, the banks are required to implement innovations in a targeted and consistent manner. Often, they also cooperate with start-ups. The resulting new fintech ecosystems are restructuring the financial services sector from a customer, product and service perspective.

 

Applications of artificial intelligence

Digitalisation goes far beyond the automation of processes. With the digital replication of human decision-making structures, so-called artificially intelligent and self-learning systems are being created. The range of possible applications of artificial intelligence is enormous. Support in data evaluation by software or chatbots are already regular companions in our everyday lives. More advanced approaches aim to replace human intelligence with digital solutions for the entire value chain of a financial services provider. In such a setting, software could not only develop new products and services by linking data, but also advertise and distribute them in a targeted manner. Payments, loans or securities transactions would be fully automated. Technological solutions could also replace humans in administration and human resources.

 

Decentralised Finance increases scalability

With cryptocurrencies and digital means of payment based on the blockchain, new trends and developments in finance have been emerging for several years and have gained significant momentum. Due to their high volatility, however, their function as a store of value is still very limited, at least today. Digital currencies issued by central banks are currently experiencing a major boom. There are currently a number of projects, for example by the Bank for International Settlements (BIS) together with the SNB and other national banks. The prerequisites are solutions for digital identities and KYC. The blockchain enables decentralised finance, i.e. the offering of financial instruments without the management and control function of intermediaries. At the same time, the degree of automation increases and transaction times are reduced, thus increasing scalability across all product categories in the payment, investment and credit sectors. Examples range from trade finance solutions to peer-to-peer insurance. However, there are still some technical problems to be solved in the areas of consensus mechanisms, performance and governance.

 

Tokenisation changes investment behaviour

In addition to means of payment, financial assets such as shares, bonds or real assets (e.g. real estate, precious stones) can also be tokenised, i.e. securitised with blockchain technology, and managed in a decentralised manner without an intermediary by means of distributed ledgers. The new possibilities will probably influence the behaviour of market participants. If private investors can now invest directly in tokenised assets, they will take advantage of this. The same applies to institutional investors, for whom new asset classes are open. Significant changes can be expected in the value chain of the financial industry. For example, funds can be made simpler and more transparent with fewer players. This also applies to insurance contracts if they are fully digitised via smart contracts.

 

Fintech expertise for financial professionals

Fintech is a prominent topic in the financial industry. The applications are becoming more and more mainstream and open up numerous new opportunities on the client and investor side. Understanding the digital transformation, keeping a critical overview and putting the individual developments in context is a major challenge. For financial professionals, it is essential to stay on the ball and acquire the knowledge to competently advise and support their clients. Against this background, AZEK is now offering the course Fintech. The essentials for practice course (more information at https://www.azek.ch/de/ch-de/ausbildung/azek-fintech-zertifikat/).

 

AZEK Training Centre and SFAA Analysts Association

The AZEK Training Centre for Financial Professionals was founded in 1990 by the Swiss Financial Analysts Association SFAA. AZEK is a leading provider of financial education in Switzerland in the areas of Financial Analysis & Asset Management, Wealth Management, Financial Market Operations, Financial Data Science and ESG. The courses combine comprehensive theoretical knowledge with a strong practical focus and can also be booked in online format. Graduates with federal and international degrees can benefit from a wide range of continuing education options.

 

Biography

Marianne Bonato has been a member of the Executive Board of AZEK and SFAA since 2016. Previously, she worked in the financial sector at banks, insurance companies, private equity and in financial consulting. She holds a degree in economics from the University of Zurich and an EMBA from the HSG.