Financial Services
reshaping services
The Future Is Weightless
Traditional financial services in developed markets – including in banking, insurance, and wealth and asset management – are ripe for disruption. Many are buried under cumbersome legacy technology platforms and reliant on high-fee transactions conducted exclusively in brick-and-mortar branches. The future of financial services will no doubt be weightless, led by the evolving ecosystem of neobanks and payments platforms.
The Future State of Financial Services
neobanks & Fintech
smart underwriting
robo-advising
The last few years have seen a global boom in neobanks – banks with no branches that only exist in the cloud and online. With much lower overhead and regulation, neobanks are expanding the consumer banking market and reaching previously disengaged and underbanked populations.
Digital payment platforms may not have the same volume of transactions as traditional players, but they are highly disruptive. With businesses making payments to their suppliers through these platforms, they have created an ecosystem that is independent of bank incumbents. Through their use of embedded credit, fintechs have the potential to partially fill the financing gap for small businesses.
Most small businesses in the US face a shortfall in financing
Source: Small Business Credit Survey: 2021 Report on Employer Firms, US Federal Reserve Banks, 2021.
“
Embedded credit in the fintech ecosystem offers compelling investment opportunities.”
INVESTMENT IMPLICATIONS SUMMARY
financial
services
Traditional financial services firms are ripe for disruption. The future of financial services will no doubt be weightless, led by the evolving ecosystem of neobanks and payments platforms.
TRANSPORTATION & LOGISTICS
Logistics are at an early stage of disruption with many opportunities for optimization and efficiency. In transportation, highly transformative innovations are on the horizon and promise to be a major part of the future.
Reshaping servIces
The impending wave of technology-driven disruption in the services sector will offer long-term, active investors ample opportunity across a host of industries.
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neobanks & fintech
smart underwriting
robo-advising
Technology has powered a range of innovations in insurance such as the ability to harness the combined power of big data and AI to reinvent underwriting, claims management, climate modeling and risk evaluation. This kind of innovation reduces costs and is a key element to achieving scale and profitability in an increasingly commoditized business. Leading life insurers are now leveraging AI to underwrite policies, helping them achieve better operational efficiency. The next evolution in life insurance is likely the increased use of data from wearables to go from static underwriting to a more dynamic process.
What began as a potential revolution in wealth management fizzled out as tech-savvy incumbents captured all the innovative elements of robo-advising. While robo-advisors offered customers attractive digital interfaces, they lacked access to distribution networks and found it hard to scale up to a profitable business. Instead, incumbent wealth management firms either acquired or built their own robo-advisors, targeting mass affluent customers, who couldn’t be profitably served by their traditional wealth management arms and younger customers, who are more accustomed to digital-first interactions.
smart underwriting
robo-advising
neobanks & fintech
healthcare
Advances in medical systems are being made to cater to a new generation of tech-savvy consumers leading to a major shift in how healthcare is delivered globally.
Public Equity
Public and Private Debt
Real Estate and Infrastructure
Venture Capital
Private Equity
Global opportunities in the expanding fintech ecosystem
Insurance firms that integrate advanced data analytics will succeed
Focus on targeted blockchain applications that solve specific problems today
Incumbent banks leveraging new technology will thrive and widen their moats
Next generation payment systems allow tech-forward incumbents and select new entrants to thrive
A very long road for EV presents ICE opportunities for debt investors
Logistics incumbents embracing cloud technology will thrive
Public Equity
Public and Private Debt
Real Estate and Infrastructure
Venture Capital
Private Equity
The future of financial services will no doubt be weightless, led by the evolving ecosystem of neobanks and payments platforms. Download the full white paper to access all the opportunities and risks on the disruption of financial services.
financial
services
Reshaping servIces
TRANSPORTATION & LOGISTICS
healthcare
TRANSPORTATION & LOGISTICS
Many logistics firms are at the cusp of disruption with opportunities for optimization and efficiency. In transportation, early-stage innovations like autonomous vehicles can be a major part of the future.
blockchain
tokenization
Portion of small- and medium-sized firms that received all, some or none of their requested financing (2016-2020 average)
Most applications of blockchain by financial institutions are in the form of private (or permissioned) blockchains. Private blockchains can reduce transaction costs, as they eliminate many of the administrative expenses of record keeping and transaction reconciliation. While they still require central authorities or intermediaries to authenticate users, private blockchains can enhance transparency and improve fraud controls for participating institutions.
Public vs. Private Blockchain
The tokenization of financial assets has the potential to transform financial services. Tokenization creates an immutable digital representation of a real-world asset, which can then be settled and cleared on a distributed ledger and traded in whole or fractional parts. If most financial and real assets were recorded on a blockchain it could disrupt virtually all aspects of investing – from clearing and settlement, to how assets are custodied, accounted for and serviced, to even how they are bought and sold.
tokenization
blockchain
blockchain
tokenization
Executive Summary
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neobanks & fintech
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smart underwriting
robo-advising
blockchain
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tokenization
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SIMPLIFIED CHINESE
TRADITIONAL CHINESE
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