Digital transformation of financial services: models and strategies for market participants
Over the past 10 years, the landscape of financial services industry has drastically changed. In the first decade of the 21st century every financial service ever imagined was provided either by an investment or commercial bank or some other traditional intermediaries. However, the second decade could be characterized as the startup boom – at the moment there are more than 12 thousand startups in the global financial services market, some services are offered by non-bank or non-credit organizations, and the largest companies in other industries are gradually entering the industry and start competing with traditional financial institutions.
One of the main reasons for such large-scale industry transformation is the strengthening of the role of digital technologies both in the financial services industry and in other aspects of one’s life, the state processes and the operations of the companies. Due to the differences in institutional environment, different models of digital transformation in financial services have emerged. United States and China experience increasing role of technology companies, so called bigtechs; in Russia traditional financial intermediaries, in particular universal banks, are ones of the most influential companies in the economy; and in Europe, where regulatory innovation has led to the emergence of open banking and the development of startups, financial services have become a more closed ecosystem.
Differences between countries and their specifics in terms of financial innovations development motivated Center for Research in Financial Technologies and Digital Economy SKOLKOVO-NES to study how industry borders reshape due to the development of financial services ecosystems and outline the main effects of their digital transformation both locally and globally. Based on the analysis of academic and business literature, as well as real cases of digital offerings implementation by various companies, we have derived 3 models of digital transformation of financial services, as well as key choices that market participants can make to form their own strategies.
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