McKinsey recently published a paper outlining ten trends shaping fintech, focusing in particular on the industry’s investment potential. The paper, entitled “Synergy and disruption: Ten trends shaping fintech”, seeks to convey the importance of being selective while investing in fintech companies as the road to success is not easy.
In particular, McKinsey’s examination of the trends highlights the different attitude taken by Western financial institutions and their Chinese counterparts when it comes to investing in fintech partnerships. McKinsey attributes the rise of China as a fintech powerhouse to local financial institutions partnering with large technology ecosystems rather than smaller fintech firms.This has resulted in the rapid growth and proliferation of Chinese technology giants such as Ant Financial, Alibaba, Ping An and Tencent.
McKinsey’s top ten trends shaping fintech are:
- High level of regional variation in successful fintech disruption
- AI is a meaningful evolution, not a great leap forward for fintechs
- Good execution and solid business models can trump exotic technology
- Scrutiny of business fundamentals is increasing as funding grows more selective
- Great user experience is no longer enough
- Incumbents can, and do, strike back
- More attackers and incumbents are partnering
- Infrastructure fintechs: Potential is high, sales cycles are long
- There is a tentative return to public markets
- Chinese fintech ecosystems have scaled and innovated faster than counterparts in the West.
A copy of the full report can be downloaded here – Download