Jamie Dimon, Chairman and CEO of JPMorgan Chase, recently told analysts he was “scared sh*tless” of the threat fintech and big tech pose to his industry.
This hugely respected banker at one of the most highly valued banks in the world is clear that his competitive set has changed. He names Ant Financial, PayPal, Square and Stripe as well as U.S. tech giants such as Amazon, Apple and Google. He doesn’t mention Asian big tech players such as Tencent, but I’d hazard a guess they’re on his radar too.
The financial services sector is in turmoil, and competition is fiercer than ever before. Fintech and big tech are jostling for position, and they’re using technology to change the rules of the game. They’re dictating the pace of change, showing customers what’s possible, and forcing the incumbents to transform fast. But is it fast enough?
Aggressive headlines such as ‘Big tech is coming for banking’, ‘big tech firms…are eager to eat the banking industry’s lunch’ and Banking’s Amazon Moment are symptomatic of a view shared by many that the tech-first entrants will seize the valuable high ground of customer acquisition and engagement leaving the incumbents knee-deep in the low-value, back-office trenches carrying the risk. Wall Street valuations indicate they back the nimble tech challengers, yet many of the neo-banks still need to turn a profit. Big tech has clout and does insight at scale, but it doesn’t tend to get on well with regulators. An increase in government legislation around compliance and consumer demand for security in many markets plays to the strengths of the established players.
The incumbents are right to be afraid, but they’re fighting back. As Mr Dimon said, “we have plenty of resources, a lot of very smart people. We’ve just got to get quicker, better, faster….”.
Firstsource believes there are opportunities for all those prepared to adapt fast, adopt the customer as their compass and partner for success. From our work with leading and innovative brands across finance and technology, we’ve developed deep insight into what makes a difference and what doesn’t; and we’ve identified five key battlegrounds where attitude and approach will determine the winners of the future. You can read about these battlegrounds—how they’re rooted in customer needs, where opportunities lie for different players, and how Firstsource can help—in our whitepaper The five key battlegrounds in financial services: fintech vs big tech vs incumbents. If you’ve only got a minute, you can download a brief summary here.
We’re using these insights to strengthen our clients’ businesses today, and to prepare them for tomorrow’s opportunities. Because there’s so much more to be won.
The global internet economy is expected to grow from 8.5 trillion USD to 30 trillion USD by 2030. Prediction is a dangerous sport at the best of times—and these are not those times. However, with financial services representing close to 8% of GDP, Firstource thinks it’s fair to expect 2 trillion USD of incremental market expansion by 2030. And that’s without factoring in new growth. Simon Torrance believes embedded finance alone represents an additional 3 trillion USD market opportunity.
If you’re looking for a partner to help you seize opportunities, add value to your operations and bottom line, and win in the brave new world of financial services do please get in touch.
Rajlakshmi Raghavan (Raji) is Executive Vice President and Head of Marketing, Branding & Corporate Communication at Firstsource. Raji is responsible for driving the global Marketing and Branding strategy at Firstsource. Her focus areas include strategies to drive business growth and branding to position Firstsource as an employer of choice in the markets we operate in.