On 22 August, the World Economic Forum (WEF) published the report “Beyond FinTech: A Pragmatic Assessment of Disruptive Potential in Financial Services”. The report, prepared in collaboration with Deloitte, maps out the impact of FinTech firms on different sectors and presents contrasting outlooks for the future of the industry.

One its key takeaways is that FinTech companies have changed how financial services are structured, but have so far failed to establish themselves as dominant players in the market. However, they have created the basis for potential disruption in the future. The success of financial institutions is thus increasingly more dependent on their ability to promptly adapt their business models and develop partnerships.

As costs are expected to lower generally, financial institutions will have to look for new ways to differentiate their offering, through cloud computing, artificial intelligence and “big data” customer analytics. As a result, banking and insurance industry are set to become even more dependent on large technology firms in acquiring the critical infrastructure and technologies. Data ownership and the shifting role of human capital will be key elements for consideration going forward.

The report notes that single channel multiple-provider platforms are going to become dominant model for the delivery of financial services. From a regulatory perspective, two challenges are highlighted: first, the FinTech disruption will affect financial globalization and global regulatory coordination: different local regulatory priorities and customer needs are likely to result in distinctly regionalized financial ecosystems. And second, an expected market consolidation and the presence of stronger product distributors in control should pose a challenge for regulators guarding against market power abuse, and may pose serious questions about the sharing of liability amongst players.

Further key uncertainties ahead are mentioned, such as the role of digital identity, the monetization of data flows, and governance issues, among others.