Digital technology is starting to overrun the entire financial services sector which leads many to believe that the companies within the industry, especially insurance companies and traditional banks, are already on the verge of extinction. Gartner, a research firm, revealed that their forecasts showed that as much as 80 per cent of the so-called heritage financial firms will be out of business in the next decade or they will be rendered irrelevant.
The report further explained that if established banking institutions and insurance companies continue to operate using 20th century process and operating models that they might be in danger of extinction. Heritage firms will have a harder time proving their relevance to the consumers as new players including fintech companies, international digital platforms and non-traditional players occupy a bigger share in the market. This will be made possible by the use of technology which will impact the economy as well as the business models that are currently used by the industry.
Gartner’s analyst, David Furlonger, said that digital transformation is as big a myth as process and mindsets followed by institutions in the industry. He added that it is important for established players in the financial services department to strike while the iron is hot using digital business models. It is their quest to create a digital platform or look for a niche products as well as services that they can capitalize on and sell to other platforms available.
A warning was then issued by the research firm seeing how many of the banks and insurance companies are not taking seriously the change that is brought by digital technology that could have quite an impact in the industry soon.
The beauty of emerging technologies like blockchain is that opportunities are created between parties that do not initially trust each other or do not know one another. Transactions are made possible without having an intermediary party that could affect the relationship between financial firms.
According to professional financial technology expert, Nadeem Shaikh Anthemis, blockchain technology will play a huge role for Ireland since it will impact various industries in the country including aircraft leasing, regulation, banks, insurance, funds and payments.