Hong Kong, 19 Dec 2016
- Henri Arslanian - PwC's newly appointed FinTech and RegTech Leader for China & Hong Kong - is well known for his annual list of predictions for the New Year. This year is no exception. "2016 was the year FinTech went mainstream," says Henri. "So what can we expect for 2017? Here are some of my predictions for FinTech in Asia".
1. Forget the unicorns … watch out for the Chinese dragons instead!
China is the global leader in many aspects of B2C FinTech, with firms such as Tencent and Lufax deploying innovative ways to deliver financial services to millions of customers. However, very few people outside of China are aware of these firms or appreciate how advanced their offerings are compared to their peers in the West.
Perhaps 2017 will be the year when China's role in FinTech innovation finally gets the respect and attention it deserves on the global level?
2. RegTech, RegTech and RegTech
Since the Global Financial Crisis, banks have dealt with new regulations by hiring thousands of compliance officers and adding costly headcount. Many RegTech solutions are now becoming available to help banks reduce such costs. Unlike FinTech, where there is an element of competition between banks, RegTech is an area where everyone could win by cooperating. Could 2017 be the year of RegTech?
3. Opening my bank account with Facebook?
The large tech firms in Asia, such as Tencent and Ant Financial, are already very active in the financial services space. Many of their Western counterparts, from Facebook to Apple, are continuing to make inroads into financial services. In 2017, expect this push into financial services to continue, with Western tech players looking to China for inspiration.
4. Forget FinTech, what exactly do you do?
This industry has grown so much in recent years that nobody can really claim to be a 'FinTech specialist'. Each of the many verticals of FinTech, from P2P and payments to roboadvisory and blockchain, have become disciplines in their own right.
This trend will continue in 2017, as the FinTech industry matures and related disciplines such as RegTech and InsurTech increase their dedicated following.
5. Artificial intelligence and robots to the rescue?
While there has been much media focus on AI replacing human fund managers or traders, the most pressing cases may be cost reduction or compliance issues. AI can help banks detect money laundering or employee misconduct by replacing costly manual processes. 2017 may be another good year for AI. The good news for banks is that these robots do not ask for raises or vacations and don’t have big egos.
6. India leading the way?
One of the most ambitious FinTech projects globally is the 'India Stack', which will drastically transform the financial services industry in the country. However, as with similar innovations in China, few people in the West are aware of it. The India Stack has many impressive layers, including a universal biometric digital identity, already issued to more than 1 billion people, as well as a single interface for all of the country's bank accounts and wallets. In 2017, will other jurisdictions be inspired by what India is trying to achieve?
7. Where can I learn 'FinTech'?
As FinTech enters the mass market, expect universities and other bodies to offer more FinTech courses. Business schools and finance programs will need to make courses on design, coding and engineering part of their curriculum, as these are the skills that many bankers of the future will need.
Will we start telling students in 2017 that if they want to work in banking, they should perhaps become programmers or designers? Are Python and C++ the new English and Mandarin Chinese?
8. Meet your new colleague, Mr Chatbot!
Chatbots, which mimic human conversations in apps such as Facebook Messenger and WeChat, went from novelty to mainstream in 2016. Several customer-facing chatbot applications are now being tested for uses ranging from retail banking to insurance claims.
Expect many more of these to be piloted and rolled out in 2017, as chatbots start to become part of our everyday lives. Get ready to welcome your new colleague, Mr Chatbot!
9. Where have all the bankers/angel investors gone?
Bankers used to be a big source of angel capital for FinTech start-ups, especially across Asia. Due to job losses, many of these previously bullish bankers are becoming more cautious about start-up investments. This is directly affecting the fundraising landscape for early-stage FinTechs.
Unfortunately, this trend is likely to continue in 2017.
10. FinTech arbitrage by building in the West and selling in Asia?
More innovative FinTech firms based in America or Europe may choose Asia - using Hong Kong or Singapore as entry points - as their target market. While there is tremendous FinTech and RegTech interest from banks in Asia, the pool of quality homegrown FinTech start-ups is limited. This presents a unique opportunity for FinTechs to develop the R&D in the West and deploy it in Asia.
Henri Arslanian is PwC's FinTech & RegTech Lead for China and Hong Kong. A lawyer and banker by background, Henri is a published author, a TEDx speaker, and an Adjunct Associate Professor at the University of Hong Kong, where he teaches courses on FinTech and Entrepreneurship in Finance.
LinkedIn: Henri Arslanian