AI, machine learning, IoT and blockchain technologies are set to increase the velocity of transactions and expand the global pool of consumers able to access financial services. The information needed to assess risk will become fully embedded in the products, while the speed of transactions could be multiples of the speed available today. Against this backdrop, it is likely that a wave of M&A will continue for years, with incumbents battling digitally native new entrants. Meanwhile, companies will need to develop new technologies alongside existing technology infrastructure in order to prepare for greater demands on legacy systems.
Company specific thoughts:
A number of thought leaders in this sector have proved willing to undertake strategic M&A in order to advance technology while avoiding being disintermediated. These include Accenture (ACN), MasterCard (MA), PayPal (PYPL), Square (SQ) and Visa (V). While many of these companies represent incumbent technology, they are also investing in new emerging technology and startups. In due course, these developments could be used as a feeder pool for further acquisitions.
Technology: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.