Despite its buttoned-down image, the financial services industry has entered a period of turmoil caused by new technology, consumer expectations and consolidation in addition to regular capital market volatility. That’s the conclusion of a report by global accounting firm PWC that enumerated 10 trends that will impact financial services in 2020. The overriding disruption, according to the report, will come from financial technology. “FinTech will drive the new business model,” the report states. “It is now becoming obvious that the accelerating pace of technological change is the most creative force – and also the most destructive – in the financial services ecosystem.” For wealth managers, financial planning and investment monitoring software gives clients an alternative to old-fashioned human planners. However, as Reza Zamani, chief executive of Steel Peak Wealth Management in Woodland Hills, told the Business Journal for this Special Report, humans still belong in the money business. “There is an element of high-end financial planning, estate planning, investment advisory and looking at different solutions that technology cannot replace,” Zamani said. The market battle against technology will continue, according to the PWC report. The report cites a PWC survey of finance industry professional that found “a quarter of their business, or more, could be at risk of being lost to standalone FinTech companies within five years.” Among commercial bankers, industry consolidation and non-bank lenders have squeezed traditional middle market institutions. Meanwhile, government regulations that require more information from borrowers make deals more difficult and demand new technology. “It’s a challenge for banks to capture and report the amount of information the government wants,” Tamara Gurney, chief executive of Mission Valley Bancorp. in Sun Valley, told the Business Journal. The rise of online banking, another trend cited in the PWC report, present another source of new competition for banks. Other industry trends in the PWC report, titled “Financial Services Technology 2020 and Beyond: Embracing Disruption,” include cyber-security as a top risk for financial institutions, the acceptance of blockchain technology in financial transactions and the emergence of “customer intelligence” as “the most important predictor of revenue growth and profitability” for financial firms. – Joel Russell
