Digitalization and the concept of the digital itself have allowed the development of a new type of actors: the FinTech
Their goal: to use the new technologies of communication (smartphone / internet) and calculation (algorithms / predictive analysis) in order to provide "custom-made" financial services, at a lower cost and in a more efficient way, compared to the ones provided by the traditional actors, who are the banks and the insurances.
The change from a centralized information system under PacBase (platform of software engineering in COBOL providing the famous green screens) to operations under Windows has required nearly 20 years; the same process for the Fintechs with Smartphone applications is operational in only a few months.
What will be the impacts on the banking workforce of the current digitalization, the digital development itself, and since recently, the introduction of Artificial Intelligence forecasting tools, especially for its ageing part, that have not been raised by the technologies?
A study of banks social data, realized by ‘l’Observatoire des métiers de la banque’ (2013), presents the repartition of the french banking workforce by business type (sales workforce, operational workforce and support functions)
Changes in the jobs profiles are expected for the following positions:
1/ Client services managers for individuals or professionals:(38.000 + 9.000 jobs)
The sales positions in bank branches are being highly impacted by the downward trend in banks branches visits (17 % of customers visited their agency at least once a month in 2013, against 62 % in 2007 (FFB source)) and the parallel increase of accounts consultation via Internet (currently 83%).
The operations usually handled by bank branches reception officers (17.000 positions), including the processing of small accounts transfers, the requests related to debit/credit cards or deposit of the checks, can now be processed Online. The Client services managers in the 3 areas (Individuals, professionals and corporates) represent more than 54.000 actors among the banks AFB workforce.
Some Fintechs are integrating the market : Payplug – providing online secured payments, Lydia – providing an api for payments via smartphones, Bankin – a banking aggregation and automatic management of budgets, and Credit.fr – a loan platform for corporates and offers services for cash account management and consolidation, using one or several customers accounts.
2/ Client services managers for Corporates : (7.000 jobs)
In France, for PME and start-up obtaining a financing is complex, because of the financial institutions regulatory constraints who struggle to grant a loan, and because of the never-ending financing procedures: banks can take several weeks to provide the funds. Some crowlending Fintechs have integrated peer-to-peer lending business and have financed 345 projects in 2015 on 11 platforms what connect directly potential investors with applicants for fundings. The sector has collected 27M euros. The two main platforms are Lendix and Unilend.
Fearing a financing turned down by the banks, crowfunding is a very important step for corporates or individuals aiming at raising funds for their projects. This funding method has been especially used for micro financing in emerging countries and has shown its success. However, it led to the reductions of financing requests for bank corporate advisors. The success of crowfunding is represented in the collect of 133,2 ME realized during the first half of 2015 which represents an increase of 100% in a year.
3/ Wealth manager: (9.200 jobs)
In the same way as medical diagnosis is already performed by applications as IBM Watson, the analysis of a customer’s assets can be transcribed in automatic in order to present a patrimonial, fiscal or inheritance situation. These data will serve for the presentation asset/liabilities of the customer’s financial situations (management report with performances and other graphs). Arbitration scenarios could also be proposed automatically.
French Fintechs as FundShop -(Arbitration advices for contracts in life insurance), Advize -(assisted management for a contract in life insurance), or still MarieQuantier and Yomoni (optimized allocation of ETF) simplify this existing process. They provide extremely fluid and friendly transactions on mobile supports and intend to propose to retail clients the products and services mentioned previously and reserved so far for to private banking clients.
4/ Traders and sales persons (2.800 jobs)
The new regulations on risks control and conformity of payment orders have increased the time spent on monitoring, and on processing of the transactions, initiated by the market traders. To help the institutions, a few Fintechs propose now to handle these pre-trade steps: Scaled Risk, a specialist of Big data technologies, In-Memory a specialist for massive data management in real time and Quartet FS with it platform ActivePivot analyzing in real time the market data variations.
In the same way, the sale of structured products could be automated (creation of the data sheet and of the standard prospectus, tracking of the data to allow yield simulations…).
As an example, Invivoo is a trading platform specialized in corporate Bonds. They develop automatic arbitrations executed by robo-advisors on E-trading platforms and thus, there is less intervention in trading room. MetaTrader4 provides technical analysis, E-Toro provides foreign, commodities and equities exchanges, Tradeo is specialized in social trading by confrontation of strategy and the possibility of duplication of these the best in the world. Kantox is a currencies platform for PME and ETI companies.
5/ Back-office: (18.450 jobs)
The dematerialization of documents (loans, financing, succession), the rationalization of processes or the automation of reconciliations of operations can lead to the emergence of fintech insuring this type of service.
While back-office departments have started with the integration of these new systems, Fintech have also purposed services for some back-office consuming tasks as payment methods, mortgages of project financing, tasks that require additional monitoring and heavy contracts papers.
A better knowledge of digital tools and digital materials developed by the banks, together with a professional certification in these areas could facilitate the transformation of these jobs.
6/ Financial analyst: (600 jobs in France)
Collect and consolidation of economic sectors informations can now be realized by an algorithm collecting thousands on internet pages or financial reports and generating automatically financials analysis reports. The analysis of a company financial ratios (eg historic trend) could be better performed by the analysis tool of a Fintech than by an individual.
One of the first companies to provide these services is the French Fintech Alphametry. It offers this type of service by connecting the managers of funds with financial analysts everywhere in the world. In the same way, Estimize is a platform which federates more than 5,000 anonymous contributors and covers more than 1,000 companies with a reliability on the EPS higher of 70% than the forecasts announced by the analysts of Wall Street. ResearchPool an open and user-friendly research marketplace with 20000 online reports. Taking into account the the high use of ETFs in portfolio management, TrackInsight platform proposes a comparison and a selection of more than 650 ETF Europeans to the institutional investors. The recent notation of European ETF by the Koris company reinforces the attraction to the detriment of the direct investment in actions.
7/ Conformity / Permanent control: (4.900 jobs)
The RegTech (regulatory Fintech) will allow the banks to rationalize and automate the regulatory reporting and the monitoring, in real time, on the conformity of all operational processes and this, in order to reduce and identify money laundering or fraud behaviors.
In France, AMfine is a collaborative platform who automates 80% of the products, management, and regulatory reporting (AIFM, SRRI, SCR Marché…) and financial reporting (KIID, prospectus, PRIIPs…).
In the USA, the ‘RegTech’ AxiomSL provides a platform consolidating financial data and producing more than 1.600 reporting for 40 local regulators for several purposes (Bâle III, Dodd-Frank, AIFMD, FATCA, EMIR, FINREP/COREP or Solvability II…).
Conclusion
The arrival of FinTechs in the banking industry deeply transforms the courant organisational models. New paradigms will be built in collaboratif or integrated model. The banks will have to create more added-value in the advice services: the Client service manager will have to cross the internal Big Data with those consolidated from the social networks in order to offer personalized services and products.
The financial specialists will have to communicate on the entire chain of value: from the financial analyst to the trader via the controllers of risks and conformity. The reduction of the response time to a customer request will be also a good way to improve the customer relation. The simplicity or the speed of the proposed services by FinTechs will become the benchmark for the banking information system in order to keep the control on the trade.
Lastly, the increased level of digital knowledge and related tools by the banking workforce will be the guarantee of a healthy and fair competition for all actors of the digital revolution!