FinTech –
transforming
finance
The report explores
the transformation
underway as a result of
the continued expansion
of FinTech and its ongoing
impact across the financial
services landscape.
September 2016
About ACCA
ACCA (the Association of Chartered Certifed Accountants) is
the global body for professional accountants. It offers
business-relevant, frst-choice qualifcations to people of
application, ability and ambition around the world who seek
a rewarding career in accountancy, fnance and management.
ACCA supports its 188,000 members and 480,000 students
in 181 countries, helping them to develop successful careers
in accounting and business, with the skills required by
employers. ACCA works through a network of 95 offces and
centres and more than 7,110 Approved Employers
worldwide, who provide high standards of employee learning
and development. Through its public interest remit, ACCA
promotes appropriate regulation of accounting and conducts
relevant research to ensure accountancy continues to grow in
reputation and infuence.
Founded in 1904, ACCA has consistently held unique core
values: opportunity, diversity, innovation, integrity and
accountability. It believes that accountants bring value to
economies in all stages of development and seek to develop
capacity in the profession and encourage the adoption of
global standards. ACCA’s core values are aligned to the
needs of employers in all sectors and it ensures that, through
its range of qualifcations, it prepares accountants for
business. ACCA seeks to open up the profession to people
of all backgrounds and remove artifcial barriers, innovating
its qualifcations and delivery to meet the diverse needs of
trainee professionals and their employers.
In June 2016 ACCA formed a strategic alliance with
Chartered Accountants Australia and New Zealand (CA ANZ).
The alliance represents the voice of 788,000 members and
future professional accountants around the world, who share
the commitment to uphold the highest ethical, professional
and technical standards.
More information is available at: www.accaglobal
ACKNOWLEDGEMENTS
This report was prepared with the help of:
Yoni Assia, Founder and CEO, eToro
Steve Bailey, Founder, Carbon Architecture
David Barnes, Global Managing Director for Public Policy,
Deloitte
Richard Brown, Partner, Santander InnoVentures
Taavet Hinrikus, Co-founder, TransferWise
Alastair Lukies, Chairman, Innovate Finance
Julie Meyer, Managing Partner, Ariadne Capital
Bivek Sharma, Partner and Head of Small Business
Accounting, KPMG
Dr Dominik Steinkuehler, Co-founder and Group Managing
Director, Lendico
Michael Wood, Co-founder, Receipt BankTechnology has become the driving force
behind many changes to society and the
global economy. That technology has
caused the rapid and continuous
disruption of a succession of industries is a
given. In the fnancial services industry, with
the growth of fnancial technology
(FinTech), we are witnessing signifcant
transformations to systems and processes
that had stood the test of time. What
makes FinTech so potentially
transformative is the scope for materially
altering the fundamentals underpinning
the applications that make up the
backbone of our commercial lives.
A range of systems and processes in areas
including payment, lending, retail banking,
asset management, fraud protection and
regulatory compliance are now populated
not just by well-known and established
institutions but also by challenger start-ups
vying for a say in the future. These new
entrants, alongside reconfguring
incumbents, are reformulating service
design and delivery through technological
developments and advancements in
software, user experience and data mining.
At the same time, regulators around the
world, operating in countries whose
fnancial services sector is in varying stages
of development, must fnd the right
balance between harnessing the
possibilities offered by FinTech and the
right level of forward looking legislation to
give it the best chance of fourishing.
Fintech – transforming fnance
– explores
the features of this new landscape,
highlighting the many ways in which this
revolution is taking place. For professional
accountants, this new terrain will provide
many opportunities as it permeates deeper
and deeper into the fabric of society.
From the promise of blockchain, to the
demands of valuation in a digital era,
fnance more than ever needs an
experienced, knowledgeable guide to
make the most of the opportunities ahead.
Ng Boon Yew
Executive Chairman,
Raffes Campus Pte Ltd
and Chairman, ACCA
Accountancy Futures Academy
Foreword
Financial Technology (FinTech) is here
– sweeping through fnance and, if some
proponents are to be believed, threatening
traditional edifces that have stood for
centuries. This great surge is being fronted
by a host of new start-ups taking their lead
from the big tech innovators. Their
maverick approach is helping to push the
FinTech industry into new territory across
the fnancial services landscape, raising
billions of dollars and worrying the
incumbents. So what are the main trends
and driving forces shaping FinTech today
FinTech start-ups span the spectrum of
fnancial services, from lending and
advice to foreign exchange and
payments. One aspect that many of them
share is strong growth: thousands of per
cent in some cases. Not surprisingly, this
has been attracting attention from investors.
And as technologies evolve at pace (did
someone say blockchain), the potential
for further disruption is ever present.
New technology means new banks.
Without the need for bricks, mortar or even
physical money, many start-ups are
changing perceptions of what a bank can,
and should, be. Many of these new banks
have appeared in the UK, owing to the
country’s FinTech pull. FinTech is changing
not only how banks operate, but also the
way people invest. By sidelining fnancial
advisers, FinTech frms reduce the cost of
investing and make it simpler.
Cryptocurrencies such as bitcoin are
presaging deeper disruption. The
technology that underpins bitcoin –
blockchain – could transform the way in
which many fnancial transactions are
conducted. From trading shares to wiring
remittances, intermediaries, upon whose
security and technology everyone once
relied, are becoming redundant.
Some commentators believe the banks
are fnished, while others see this as
their chance to fght back. Most big
banks lack the agility of smaller rivals and
still rely on legacy IT systems that are
outmoded and unwieldy. Nevertheless,
they are also trying to adjust to the
potential of FinTech by acquiring
challengers, or, increasingly, fnding ways
to collaborate with nimbler new entrants.
Regulation could turn out to work in the
banks’ favour. The FinTech upstarts face a
raft of legislation that, depending on
jurisdiction, limits what they can do.
Nonetheless, regulation itself is under
constant review and some countries,
including the UK, are supporting innovators
and entrepreneurs – and the banks – as
they navigate the rules. The Regulation
Technology (RegTech) sector, made up of
frms that provide technology solutions to
enable better compliance with regulatory
requirements, is also set to play a
signifcant role in redefning the landscape.
For professional accountants, helping
companies manage the regulatory, tax
and fnancial implications of the FinTech
surge offers considerable opportunity.
The banks and many professio