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An assessment of the disruptive potential of fintech in financial services

Brokers / 16th October 2017

16 October 2017

An assessment of the disruptive potential of fintech in financial services

At the end of August, the World Economic Forum released a major piece of analysis examining the changes to the financial system which have followed the rise of fintechs. The report assesses the impact of fintechs (small, technology‐enabled new entrants), and considers their evolving relationships with existing companies and regulators.

We believe that the whole insurance industry should be taking note and making plans as a result of this major game-changer in financial services provision. To keep our customers up to speed on the latest developments, we have compiled a quick summary of the key points and implications.

The main conclusions of the report are:

  • Many fintechs came into being with the aim of overtaking existing companies and becoming the new dominant players in financial services, but have instead, shifted to building partnerships with them as they struggle with scale and customer adoption.
  • Fintechs have seized the initiative – defining the direction, shape and pace of innovation across almost every subsector of financial services. They have succeeded as both stand‐alone businesses and crucial parts of financial value chains.
  • Fintechs have reshaped customer expectations, setting new and higher bars for user experience. Through innovations like rapid loan adjudication, they have shown that the customer experience standard set by large technology firms such as Apple and Google can also be met in financial services.

    Customer willingness to switch away from incumbents has been overestimated. Switching costs are high, and innovations are often insufficient to warrant the shift to a new provider, especially as incumbents adapt.
  • Fintechs have struggled to create new infrastructure and establish new financial services ecosystems, such as alternative payment rails or capital markets. They have been much more successful in making improvements within the existing arrangements.

The full report can be read here and will be of interest to anyone operating in financial services. In conclusion, we believe that the arrival of fintechs has radically shaken up the industry, but as yet they have been unable to fundamentally change the competitive landscape. However, there’s no guarantee that this won’t happen in the future and all decision makers need to be keeping a close eye on developments and making plans accordingly. We will be producing further analysis specific to the insurance sector in a future article. If you have any questions or comments then please contact us at

All examples provided by Premium Credit Limited are for illustrative purposes only and not to be considered as advice or relied upon by you, your employees or agents.  Premium Credit Limited accepts no liability for the content provided.  You should consult your own advisors for all advice on your regulatory and legal requirements.

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World Economic Forum