Will FinTechs replace traditional banks and insurance companies ? A KPMG Perspective

June, 2016

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Document Classification: KPMG Public

What is Fintech

A contraction of the words ‘Financial’

and ‘Technology’, innovation in financial

services, whether that means new

products from new startups, or the

adoption of new approaches by existing

players where technology is the key

enabler.

Source: NDRC

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Document Classification: KPMG Public

Technology driven innovation

– 10.000 + Fintech companies

– $19.1 billion in 2015

– Insurtech is lagging behind, but growing at a pace

– Regtech is very promising ($ 100 billion market?)

Banktech Insurtech Regtech

Fintech

4 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

The Latest News – Funding to VC-backed Fintech

companies increasing once more to

5B $ in 16Q1

– Big Deals in China dominating the

fintech space

– European fintechs – slowly taking

speed, except for the UK

– Decreased focus on Payments

– Increasing interest in Insurtech

- Open Access (PSDII)

- Internet of things

- Global Platforms

- Age of the digital customer

- Artificial intelligence

& robots

- Social & Mobile

- Cyber security and Data Privacy

- …

Fintechs are surfing on the technological wave

6 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

Fintechs also face many challenges

- Start up growth pains

- Limited access to customer

- No global or captive platforms

- Wonga in trouble?

- Venture Capital Fluctuations

- Regulation

- No established brands

7 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

Disruptors vs Enablers

Funding in 2015* *‘Fintech 100’ - KPMG

Disruptors Enablers

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Document Classification: KPMG Public

Insurtech

– Insurtech will impact all insurance

products by introducing new technologies

throughout the whole value chain.

– Most Insurtech are active in distribution,

followed by underwriting.

– A striking majority of the Insurtech are

enablers.

– In particular distribution, underwriting,

claims, risk and investment

management.

Car

Life/Home

Health

*Commerzventure

Enterprise

9 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

What are financial incumbents doing? Leveraging Fintechs to accelerate innovation

10 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

Platforms are the new dominant business model

– Captive platforms are asset light and

data heavy

– They become the default destination for

customers

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Document Classification: KPMG Public

How does this apply to the financial sector? A financial Platform as default destination (1/2)?

Platforms as opportunity for

Fintech

The global platforms enable Fintechs

by reducing the cost and complexity

to deliver financial services.

(access to cloud, app stores, mobile

devices, KYC, etc.)

Service Unbundling

Specialized (one service) Fintechs

thrive within these eco-systems. Often

starting as a mobile application and

slowly unbundling the bank/insurer.

1 2

12 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

The financial platform:

– Becomes a default

destination for customers

– Core banking capabilities

will be central

– Combined with a

marketplace for financial

services

How does this apply to the financial Sector? A financial Platform as default destination (2/2)?

3

Source: Philippe Gelis

13 ©2016 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Document Classification: KPMG Public

– Altogether Fintechs pose

more opportunity than

threat

– Key enabler for F.S. digital

(R)evolution

….

– But what if the Block chain

delivers on its promise or a

global platform emerges?

Opportunity or Threat?