Fintech will never die

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On March 10th, 2000, the burst of the so called Dot-Com Bubble started. After nearly doubling within only one year and peaking at 5048, the NASDAQ index fell as much as 78% in the aftermath of that day. Clearly, estimates vary, but it is said that the astonishing sum of USD 1.7 trillion were lost in less than a year.

Shedding the “e-“ prefix and “.com” suffix

The vanishing assets were the most obvious and immediate consequences of this remarkable period. Yet, the burst of the Dot-Com Bubble had also other ramifications. Expressions, names and language changed rather abruptly. While the “e-“ prefix was widely adopted for products and firms before March 10th, companies were now shedding the “-e” attribute faster than an Alaskan Malamute its winter coat during springtime. The same happened to the “.com” suffix. All of sudden no firm wanted to be associated with eCommerce any longer; bricks and mortar became fashionable again. Even email turned into mail and – to make it distinguishable – to what was previously termed mail, postal mail became snail mail.

Absorbing Dot-Com technology

Yet, the eCommerce and Dot-Com technology did not disappear. On the contrary, the innovations made in the years leading up to the bubble burst prevailed. Web technologies have never been as pervasively applied as today. A Web sales channel or at least an information outlet has become a standard for most enterprises in the western world. Hence, Internet technology did not disappear with the burst of the Dot-Com Bubble. Rather than that, it was absorbed, transformed and adopted by the majority of firms and turned into a business standard.

After the burst of the Fintech bubble

The same will happen to Fintech. It is safe to say that we will see a Fintech bubble burst in the years to come. Turning into an outcast in the eyes of investors Fintech will then disappear as a label. However, a good share of the innovations brought forward by Fintech firms will then be absorbed by other players, such as by incumbent banks, insurers and software companies.

In 1996 Wesley Willis released his album “Rock ‘n’ Roll Will Never Die”. The Rock ‘n’ Roll that evolved in the United States during the late 1940s and early 1950s has ever since been absorbed, transformed and adopted by other musicians around the world. In that sense Rock ‘n’ Roll is truly immortal. The same will apply to Fintech.

Dr. Patrick Schüffel, Professsor, Institute of Finance, Haute école de gestion, Fribourg Chemin du Musée 4, CH-1700 Fribourg, patrick.schueffel@hefr.ch, www.heg-fr.ch

ARBEITSMARKT – Selbst Top-Jobs sind in den kommenden Jahrzehnten bedroht. Die Finanzbranche macht da keine Ausnahme.

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Nr. 168 vom 31.08.2016 Seite 030

Sie sind, mit ihrer Mischung aus hochkompliziertem Denken, Intuition und mitunter leidenschaftlich verteidigten Grundsätzen, sozusagen die Theologen des Kapitalismus: die Ökonomen. Kaum ein Berufsstand im Bankbereich genießt so hohes intellektuelles Ansehen. Nirgendwo sonst spielt akademisches Denken im Geschäft eine vergleichbar große Rolle. Aber wie wahrscheinlich ist es, dass auch im Jahr 2033 Banken noch Ökonomen beschäftigen? Nach Meinung von Patrick Schüffel, Finanz-Professor im schweizerischen Freiburg, wird dieser Job zwischen 2023 und 2033 mit einer Wahrscheinlichkeit von 43 Prozent vom Computer übernommen. Ein Beispiel dafür, dass der digitale Kollege, der uns in den letzten Jahren mehr und Routinearbeit abgenommen hat, künftig auch intellektuelle Aufgaben übernimmt.

Schüffel stützt sich bei seiner Prognose auf eine Arbeit von Carl Benedikt Frey und Michael Osborne mit dem Titel “The Future of Employment”. Darin haben die beiden Wissenschaftler, gestützt auf offizielle Jobbeschreibungen der US-Regierung, 702 Berufe untersucht. Sie prüften mit einem mathematischen Modell, das auf Basis bisheriger Trends Prognosen erstellte, die Wahrscheinlichkeit des Verschwindens von Jobprofilen. Ihre Schlussfolgerungen sind dramatisch: “Nach unseren Schätzungen sind 47 Prozent der Stellen in den USA einem hohen Risiko ausgesetzt. Das heißt, die entsprechenden Tätigkeiten können irgendwann in der Zukunft, vielleicht in zehn oder 20 Jahren, automatisiert werden.”

Schüffel hat gezielt die Daten für die Bankbranche für das Jahrzehnt bis 2033 aus der Studie herausgezogen. Die Ergebnisse zeigen eine große Bandbreite. So liegt die Wahrscheinlichkeit, dass Verkäufer im Wertpapierbereich überflüssig werden, bei nur 1,6 Prozent. Auf der anderen Seite sind “persönliche Finanzberater” mit 58 Prozent Risiko in hohem Maße bedroht. Noch schlimmer sieht es für Leute aus, die lediglich per Hand Daten erfassen: Mit 99 Prozent Risiko hat der Beruf kaum eine Überlebenschance. Dasselbe gilt aber mit 98 Prozent auch für Buchhalter und Kreditsachbearbeiter. Zum Teil enthält die Aufstellung allerdings kaum erklärbare Differenzen: Finanz-Analysten sind nur zu 23 Prozent bedroht, Kredit-Analysten dagegen zu 98 Prozent.

Das letzte Beispiel zeigt die Grenzen derartiger Prognosen. Letztlich handelt es sich um Gedankenspiele, bei denen der eigentliche Wert weniger in den Prozentzahlen liegt als darin, Denkanstöße zu geben. Ein wichtiger Punkt ist dabei: Arbeiten, die allein eine hohe abstrakte Intelligenz erfordern, gelten als durchaus ersetzbar. Je mehr hingegen soziale Intelligenz und Kreativität gefragt sind, desto weniger Chancen hat Kollege Computer. Daher sind Verkäufer schwer zu ersetzen, auch wenn sie vielleicht weniger abstrakte Intelligenz brauchen als Ökonomen.

Soziale Kompetenz als ein Ausweg Ausschlaggebend für die Einschätzung der jeweiligen Berufe ist daher, wie die damit verbundenden Aufgaben eingeschätzt und gewichtet werden. Besteht die Aufgabe des Ökonomen vor allem darin, eine Konjunkturprognose für das nächste Quartal abzugeben? Dann hat der Kollege Computer eine gute Chance, ihn abzulösen. Schon heute gibt es Unternehmen wie etwa Now-Cast, bei denen selbstlernende Software kurzfristige Prognosen übernimmt. Oder besteht die Aufgabe der Ökonomen eher darin, Daten zu erklären und Rahmenbedingungen für die wirtschaftliche Entwicklung zu analysieren? Da tut sich der Computer schon schwerer. Viele Bank-Ökonomen arbeiten zudem de facto in der Kundenbetreuung. Sie unterhalten sich mit Großkunden über ökonomische Fragen.

Das dient nicht nur dazu, harte Schlussfolgerungen, etwa für Investitionen, logisch abzuleiten. Anleger, die ihre Entscheidungen unter hoher Unsicherheit treffen müssen, suchen versierte Gesprächspartner, mit denen sie die Last dieser Unsicherheit teilen können. Bei dieser Aufgabe ist das persönliche Gespräch durch nichts zu ersetzen, nicht einmal durch Videokonferenzen, geschweige denn den Computer.

Das Beispiel zeigt, dass der Computer viele Berufe nicht ersetzt, sondern sie verändert und die Gewichte verschiebt. So gibt es etwa bei freien Finanzberatern in den USA den Trend, Anlage-Entscheidungen tatsächlich Computern, den sogenannten Robo-Advisern, zu überlassen. Kernaufgabe des Beraters ist dann nicht mehr, dem Kunden einen angeblich heißen Aktientipp zu geben. Vielmehr muss der Dienstleister helfen, eine Einschätzung seiner finanziellen Situation und Risikobereitschaft herzuleiten. Diese kann dann Grundlage für die maschinelle Verwaltung eines Depots werden.

Heute schon gibt es auch Firmen, die vom Handel an den Kapitalmärkten leben, ohne einen einzigen Händler zu beschäftigen. Die Aufträge werden vom Computer erledigt. Aber die jeweilige Software entsteht in Zusammenarbeit von Computer- und Kapitalmarktexperten. Für viele Banker dürfte gelten, was Frey und Osborne als Schlussfolgerung ziehen: “Damit Beschäftigte das Rennen gewinnen, müssen sie kreative und soziale Kompetenz erwerben.”

ZITATE FAKTEN MEINUNGEN
Nach unseren Schätzungen sind 47 Prozent der Stellen in den USA einem hohen Risiko ausgesetzt. Carl Benedikt Frey, Michael Osborne Professoren in Oxford

https://www.financial-career-bw.de/news-events/news/detailansicht/artikel/welche-bankjobs-der-computer-uumlbernimmt/

 

Is Your Banking Job Gone Soon?

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Fintech is steaming ahead at an incredible pace. What robots used to be for the automotive industry, algorithms have become to the banking industry.

Common wisdom had it that one’s job would be secure if one was well educated and kept up-to-date on the job. Now, however, we are increasingly facing a situation when even highly sophisticated occupations such as personal finance advisors as well as accountants and auditors will fall prey to digitalization.

The Future of Employment

In their 2013 study “The Future of Employment” Karl Benedikt Frey and Michael Osborne estimated the probability of computerization for 702 professions based on three factors: perception and manipulation tasks, creative intelligence tasks and social intelligence tasks.

Applied to Banking

Of those occupations examined by Frey and Osborne I have extracted those that I find relevant to the banking industry. The percentage figure displayed indicates the likelihood of that profession being computerized in “a decade or two”, i.e. between 2023 and 2033.

Occupation: Probability of Computerization

Sec., Commod., and Fin. Services Sales Agents: 1.6%
Financial Managers: 6.9%
Management Analysts: 13.0%
General and Operations Managers: 16.0%
Financial Analysts: 23.0%
Business Operations Specialists, All Other: 23.0%
Managers, All Other: 25.0%
Financial Specialists, All Other: 33.0%
Economists: 43.0%
Customer Service Representatives: 55.0%
Personal Financial Advisors: 58.0%
Administrative Services Managers: 73.0%
Loan Interviewers and Clerks: 92.0%
Accountants and Auditors: 94.0%
Credit Authorizers, Checkers, and Clerks: 97.0%
Tellers: 98.0%
Loan Officers: 98.0%
Credit Analysts: 98.0%
Brokerage Clerks: 98.0%
Bookkeeping, Accounting, and Auditing Clerks: 98.0%
New Accounts Clerks: 99.0%
Data Entry Keyers: 99.0%

Source: Frey, C. B., & Osborne, M. A. (2013). The future of employment. Oxford, UK: Oxford Martin Programme on Technology and Employment.

Dr. Patrick Schüffel, A.Dip.C., M.I.B., Dipl.-Kfm.
Professsor
Institute of Finance
Haute école de gestion Fribourg
Chemin du Musée 4
CH-1700 Fribourg
patrick.schueffel@hefr.ch, www.heg-fr.ch

Luxembourg is on a FinTech Journey

PwC Press Release, 21 April 2016

According to the PwC Luxembourg Report, the Grand Duchy is an emerging FinTech innovation hub

FinTech, a game-changing alloy of technology and finance, blends innovation-focused technology companies with traditional financial sector players. The merger of these two different business approaches, the tech and the traditional one, is the bedrock of the future financial sector landscape. Luxembourg, with its modern financial institutions, is well positioned to take reigns of the FinTech revolution.

Adapting to change: rising FinTech awareness in Luxembourg

With its vibrant ecosystem of financial institutions, technology companies, R&D centres, and a highly diversified and specialised economy, Luxembourg is an emerging FinTech innovation hub. “The country already provides factual support to innovation by encouraging private and public funding, and by building up a true start-up support ecosystem: the government put FinTech as one of the six key domains of the Digital Lëtzebuerg Strategy launched in 2014, aimed at turning Luxembourg into a digital nation, and mandated Jeremy Rifkin to examine and advise on how the Grand Duchy can leverage its FinTech potential” says Gregory Weber, FinTech Leader at PwC Luxembourg.

The Grand Duchy provides an attractive ecosystem not only for FinTech companies, but for business in general. Adding its innovative and responsive regulatory environment, Luxembourg is the epitome of a FinTech aware business environment. Local market players seem to perfectly understand that by embracing the FinTech business model, the Grand Duchy is on the right path to further strengthen its recognition and reputation among investors, clients and the start-up community.

Internet, mobility, social networking and the rise of price comparison websites have changed the game over the past decade and have created a new generation of customers who demand simplicity, speed and convenience in their interactions with financial providers and even with their peers” highlights Gregory Weber. Traditional market players have started adapting to new market demands. The need to meet changing customer expectations with new offerings (resulting in an increased focus on the client experience) is top-of-mind for 86% of Luxembourg respondents when asked about the most important impact of FinTech on their business.

Business at risk: 26% of the traditional financial sector in Luxembourg may be lost to FinTechs

According to the survey, nearly all (94%) respondents from the traditional financial industry believe that part of their business is at risk of being lost to standalone FinTech companies. Incumbents believe that more than a fourth part (26%) of their business could be at risk due to further development of FinTech, though FinTech companies anticipate that they will be able to take over only 10% of incumbents’ business (compared to 33% globally). “In this regard, the asset & wealth management industry is feeling particular pressure from FinTech companies” adds Gregory Weber.

On the other hand, insurers in Luxembourg may be underestimating the threat posed by FinTech with an estimated share of business at risk of only 10%, compared to 21% for global insurance participants.

However, not only are traditional financial industry providers concerned about losing part of their business to FinTechs, they are also aware that their ways of working and product offerings will be challenged and possibly transformed.

Blockchain: high on the agenda in Luxembourg, but still underexplored

Blockchain represents the next evolutionary jump in business process optimization technology. If blockchain gains wider acceptance, it could lead to significant changes in back-office roles, as ownership could be transferred without the need for intermediaries and reconciliations would disappear once there is a shared ledger that all parties agree on. “In Luxembourg, the majority of respondents (60%) recognises blockchain’s importance and is much more willing to respond to blockchain when compared to global respondents (except for asset & wealth managers). However, none of the respondents declares being extremely familiar with the technology. Only 17% believes being very familiar with it while one in five Luxembourg industry players is not familiar with blockchain at all” highlights Gregory Weber.

The ability to collaborate, at both a strategic and business level, with a few key partners could soon become a competitive advantage of Luxembourg financial industry.

How is the Luxembourg financial sector dealing with FinTechs?

Almost half (44%) of Luxembourg financial sector players believes that FinTech is integrated at the heart of their corporate strategies. However, more than 50% either does not have a fully aligned corporate FinTech strategy or FinTech does not have any role or impact within the strategic corporate agenda.  There is no clear industry-wide trend in terms of how traditional players deal and engage with FinTechs. More than a third (34%) engages in joint partnerships with FinTech companies, 31% buys and sell services to FinTech companies, 14% rebrands purchased FinTech services (white-labelling), 14% launches their own FinTech subsidiaries, one in ten establishes start-up programs to incubate FinTech companies and 7% sets up venture funds to fund FinTech companies. Surprisingly, 21% of Luxembourg participants does not deal with FinTech at all. When both parties (traditional financial and FinTech companies) are asked about the biggest impediments when dealing with one another, incumbents name regulatory uncertainty (68%), IT security (45%) and differences in operational processes (45%). FinTechs, on the other hand, are mostly concerned about different management culture when dealing with incumbents (67% of respondents) and IT security (50%) is also a concern.

While the responses from Luxembourg participants are generally aligned with the global ones, the required financial investments for Luxembourg FinTechs when dealing with traditional financial companies (50%) clearly stand out. Globally, this issue is FinTechs’ smallest concern, raised only by 28% of survey participants.

FinTech is re-shaping the financial sector at such a pace that those players that stay behind today might not even recognise the sector in five years. With their potential, Luxembourg players, however, have all the capabilities to stay at the heart of the FinTech revolution. The golden rule: start embracing FinTech now” concludes Gregory Weber.

 

Legend:Gregory Weber, FinTech Leader PwC Luxembourg – Nicolas Mackel, CEO Luxembourg for Finance – Jonathan Prince, Co-Founder Digicash Payments SA – Romain Godard, Partner PwC Strategy& – Patrick Schüffel, COO, Saxo Bank AG – Nasir Zubairi, Entrepreneur/Investor

Notes to Editors:

About the report :

The 2016 PwC Global FinTech Survey gathers the view of 544 respondents from 46 countries, principally Chief Executive Officers (CEOs), Heads of Innovation, Chief Information Officers (CIOs) and top management involved in digital and technological transformation, distributed among five regions.

The Luxembourg-focused cut was based on the responses of 36 respondents from the financial industry’s major market players.

For a copy of the report and to see the full results, please visit www.pwc.lu