THE NEXT DECADE IN FINTECH
hOW TECHNOLOGY WILL TRANSFORM THE Financial SECTOR
The Next Decade in Fintech explores the technologies reshaping the financial sector and looks at how the structure of financial institutions and the delivery of its services are evolving.
While not new, AI is one of the key drivers of change and could boost productivity and cut costs. The use of distributed ledger technology is creating new products and services such as central bank digital currencies (CBDCs) that could bring the unbanked to the financial mainstream. And the use of biometrics authentication promises to enhance the security available to users. While quantum computing remains beyond the next decade, it could have wide-ranging benefits to financial institutions but also leave the sector exposed to a higher level of cyberattacks.
So, while digital transformation of financial services offers many advantages, it also creates new vulnerabilities.
The legal view
"Fintech and digital transformation are transforming the business models of financial institutions; the need to increase the return on capital and reduce costs in the face of investor and competitive forces are causing financial institutions to invest in new technologies. As a result, these technologies are reshaping how financial institutions deliver services, earn revenue and monetize value.
Increased dependency on technology is making businesses more vulnerable to IT malfunctions or criminal attack, consequently the importance of operational and cyber resilience is growing. The Next Decade in Fintech reflects the views of
experts from Baker McKenzie's global financial institutions practice and the financial sector generally as they set out the drivers of change, together with the opportunities and risks they bring."
Emmanuel Hadjidakis | Chair of the Global Financial Institutions Group
Explore key insights to help you prepare for the future
AI in Financial Services
Biometrics in Financial Services
Learn more about AI
Find out what the verdict is
AI is already used within the financial sector, but with the arrival of generative AI, what new use cases are there and how are they likely to affect the industry?
Will biometrics be a game changer in the race to fortify the financial ecosystem against fraudsters?
Understand what it means for financial inclusion
Tune into our Podcast
Central Bank Digital Currencies
Modular Financial Services
Quantum Computing
Central banks in all the world's major economies and many others are exploring the creation of digital currencies, with a handful of emerging economies having already launched their own.
Digital technology promises the modularization of many services — characterized by the involvement
of multiple new market entrants at different points of the value chain, where previously there was a single service or product provided by one entity.
Quantum computing remains under development, but because it promises to be a game changer for business, financial institutions can no longer ignore the benefits and risks
it entails.
Weigh up the benefits versus risks
Financial Stability
For all the benefits fintech has introduced it has also exposed the financial system to new vulnerabilities. These interconnected risks include destabilizing factors, raising questions about the financial systems’ fragility.
Discover why banks are cautious
Why Banks Are Cautious About Fintech M&A
Acquiring technology may be cheaper and quicker than developing it in-house, but traditional banks are wary of overpaying and cautious about the risks inherent in innovative business models.
Experts view in focus
Related Resources
Our Fintech Expertise and Capabilities
Cloud Compliance Center
Global Financial Services Regulatory Guide
"[The system must be interoperable] not only [to] foster inclusion, but also a competitive environment where private sector companies — banks and merchants — can both interoperate with the CBDC and compete among themselves to drive down the prices of services to individuals."
Ashlin Perumall | Financial Institutions Partner
"The combination of banks' customer data with start-ups' digital strengths has brought a number of innovative new services to the market in areas such as mobile payments."
Andre Gan | Head of Corporate Commercial and Securities Group | Wong & Partners, member firm of Baker McKenzie International
"Only a small handful of dominant market players will have the capital to invest not just in collecting and analyzing that data,
but in actually doing something with [artificial intelligence]."
Bradford Newman | Dispute Resolution Partner
"There is a concern over future cyber security and resilience if there is no investment in [quantum] systems, and the National Cyber Security Center in the UK has previously warned that firms should be considering now already how to protect their data from quantum powered threats."
Mark Simpson | Financial Services Regulatory Partner
"Some third parties are not licensed. This raises questions over consumer protection, prudential sufficiency and potentially,
market conduct issues."
Karen Man | Financial Services
Regulatory Partner
Learn more about AI
Discover why banks
are cautious
Find out what the verdict is
Weigh up the benefits
versus risks
The financial sector exemplifies the huge benefits that come from embracing innovation and digital disruption, but staying on the cutting edge of progress demands constant evolution.
Understand what it means for financial inclusion
Our Fintech Expertise and Capabilities
Cloud Compliance Center
Global Financial Services Regulatory Guide
Emmanuel Hadjidakis | Chair of the Global Financial Institutions Group
Speak to our industry experts
Andre Gan
Head of Corporate Commercial and Securities Group | Wong & Partners* | Kuala Lumpur
*Wong & Partners, member firm of Baker McKenzie International
Ashlin Perumall
Dispute Resolution Partner | Johannesburg
Karen Man
Financial Services Regulatory Partner | Hong Kong
Bradford Newman
Dispute Resolution Partner | Palo Alto
Elizabeth Roper
Dispute Resolution Partner | New York
Mark Simpson
Financial Services Regulatory Partner | London
Connect with our industry experts to get the guidance you need.
If you are seeking guidance from specific markets or you would like to contact the Fintech Group, please get in touch.
Contact us
Contact us
Explore what the future of
financial services could look like
Explore what the future of
financial services could look like
Tune into our Podcast
Increased dependency on technology is making businesses more vulnerable to IT malfunctions or criminal attack, consequently the importance of operational and cyber resilience is growing. The Next Decade in Fintech reflects the views of experts
from Baker McKenzie's global financial institutions practice and the financial
sector generally as they set out the
drivers of change, together with the opportunities and risks they bring."
Discover why banks are cautious
"Fintech and digital transformation are transforming the business models of financial institutions; the need to increase the return on capital and reduce costs in the face of investor and competitive forces are causing financial institutions to invest in new technologies.
As a result, these technologies are reshaping how
financial institutions deliver services, earn
revenue and monetize value.
Weigh up the benefits versus risks
Quantum computing remains under development, but because it promises to be a game changer for business, financial institutions can no longer ignore the benefits and risks it entails.
"Only a small handful of dominant market players will have the capital to invest not just in collecting and analyzing that data, but
in actually doing something with [artificial intelligence]."
Bradford Newman | Dispute Resolution Partner
"There is a concern over future cyber security and resilience if there is no investment in [quantum] systems, and the National Cyber Security Center in the UK has previously warned that firms should be considering now already how to protect their data from quantum powered threats."
Mark Simpson | Financial Services Regulatory Partner
"Some third parties are not licensed. This raises questions over consumer protection, prudential sufficiency and potentially, market conduct issues."
Karen Man | Financial Services
Regulatory Partner
"[The system must be interoperable] not only [to] foster inclusion, but also a competitive environment where private sector companies — banks and merchants — can both interoperate with the CBDC and compete among themselves to drive down the prices of services to individuals."
Ashlin Perumall |
Financial Institutions Partner
"The combination of banks' customer data with start-ups' digital strengths has brought a number of innovative new services to the market in areas such as mobile payments."
Andre Gan | Head of Corporate
Commercial and Securities Group | Wong & Partners, member firm of
Baker McKenzie International