Page 24 - August 2018 Disruption Report Flip Book

TRANSFORMING THE FINANCIAL ECOSYSTEM JAUNGUUASRTY 22001188
TRANSFORMING THE FINANCIAL ECOSYSTEM
How Artificial Intelligence is transforming the financial ecosystem
In the white paper, The New Physics of Financial Services, the World Economic Forum and Deloitte wrote:
Key findings | Sh
AI is alter financial s The resolution o
This shift w
essure
Artificial intelligence is fundamentally changing the physics of financial services. It is
weakening the bonds that have held together the component parts of incumbent financial
institutions, opening the door to entirely new operating models and ushering in a new set of
competitive dynamics that will reward institutions focused on the scale and sophistication
of data much more than the scale or complexity of capital.
ing the attributes necessary to build a successful business in
AI IS TRANSFORMING THE GLOBAL FINANCIAL SERVICES
ifting competencies
ervices
INDUSTRY
f previous trade-offs will create a new wave of transformation across the global financial services industry...
Dominant institutions in the past were built on...
Scale of assets
Economies of scale presented a cost advantage
Mass production
Physical footprint and standardized products drove cost-effective revenue growth
Exclusivity of relationships
Ability to have direct access to many markets and connections to investors was a critical differentiator
High switching costs
High barriers to switching providers drove customer retention
Dependence on human ingenuity
Processes scaled through additional labour and functional training
In the future, these institutions will be built on...
Scale of data
As AI drives operational efficiency, economies of scale alone will not sustain cost advantages
Tailored experiences
AI allows the scaled distribution of highly customized products and personalized interactions
Optimization and matching
Connections are digitized, increasing the importance of optimizing the best fit between parties
High retention benefits
Continuously improving product performance to offer superior customer outcomes and new value will keep clients engaged
Value of augmented performance
The interplay of strengths across technology and talent amplifies performance
Source: The New Physics of Financial Services, the World Economic Forum and Deloitte
ill have far-reaching consequences for the make-up of financial services, placing legacy business models under pr
r Impact
Sector Explorations Wild-Card Scenarios The New Physics of Fin governance decisions as financial institutions around the world face growing competitive
from those whose businesses are built around these new attributes
A clear vision of the future financial landscape will be critical to good strategic and
pressure to make major strategic investments in AI and policy makers seek to navigate the challenging regulatory and social uncertainties emerging globally.
Building on the World Economic Forum’s past work on disruptive innovation in financial services, this report provides a comprehensive exploration of the impact of AI on financial services.
KeyFindingsCross-SectoancialServices|2
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