Happy new year to you and your teams. With a busy first quarter already underway, we wanted to take a step back and highlight some of the key themes that we expect to drive growth, disruption and deal volume in the fintech and insurtech sectors in 2016.
The Internet of Things (IoT)
The IoT has been a buzzword for several years, but with ever-improving technology and interconnectivity finally reaching a critical mass, 2016 is likely to be the year that IoT gains real traction with consumers – bringing opportunities for market participants. Think smart appliances communicating with insurers and you’re beginning to scratch the surface of the potential for monetisation of this game-changing technology.
Telematics – the field of technology that encompasses everything from satellite navigation to driverless cars – is being adopted by insurers incentivise safe driving and reduce premiums, offering welcome opportunities for differentiation in a crowded market. Insurers who are “light” in this field may seek to bolt-on expertise, driving up valuations of tech players with the best proprietary technology in the sector.
Blockchain – the technology that underpins Bitcoin – had a “breakthrough” year in 2015, as market participants began to demonstrate its promise in fields away from cryptocurrencies (and KWM even made its blockchain debut!). From trade settlement to smart data storage, numerous start-ups are leveraging blockchain’s USPs of immutability, security and efficiency to challenge slower-moving, established enterprises. Expect a busy 2016 as these new players raise further capital, consolidate and seek to build revenues, whilst the best and brightest are likely to be courted by the most reactive financial services giants.
The concept of “Big Data” has been around for a while, but the collection and analysis of high volumes of increasingly complex data continues to be crucial for all big businesses – particularly banks – that want to stay ahead of the curve, in fields such as KYC, risk analysis and statement prediction. There are, of course, clear pitfalls, with regulators increasingly hawkish in respect of data security and breaches bringing hefty fines and significant reputational damage, meaning it’s vital that users of Big Data have watertight data storage policies in place.
Whether or not you’re directly involved in the banking sector, it’s highly likely you’ll be affected by the rise of digital banks in 2016. With both Atom Bank and Tandem Bank gaining banking licences in 2015, and others likely to emerge, digital-only banking threatens to challenge established banks by offering consumers seamless digital experiences underpinned by far lower cost bases.