How will the Internet of Things affect lending?

Financial services in 2030

The financial sector will change significantly over the next ten years, particularly as a result of advancing digitization. In a study, various areas of technology are examined and strategic recommendations are derived from them.

Numerous trends and developments are of overriding strategic importance for banks and savings banks. In the Bank Blog you will find studies on the most important strategic trends and developments in the financial sector.

In the next ten years, the development of new technologies will affect the entire economy. The advancing automation as well as a social upheaval from ownership to the increased use of services will affect the entire economy and thus also the financial sector.

A study by ThinkTank 2b AHEAD examined various technology trends that will shape financial services in the future. The authors want to paint a picture of financial services in 2030 in order to enable a discussion and to show practical strategies how financial service providers can be successful in the future.

Technologies are changing the financial industry

Assistants equipped with artificial intelligence, the Internet of Things, the development of brands, digital currencies, platforms, data security, privacy by design and new regulations as well as new competitors will have long-term, interrelated effects and will also leave their mark on the financial sector.

In addition, the direct effects of emerging technologies such as machine learning, distributed ledger technology and quantum computing, but especially their potential synergies in financial applications, will fundamentally change the structure of the financial system over the next decade.

Artificial intelligence favors platforms

In the future, bank customers would expect to no longer have to interact in depth with a bank or other financial services company. Both individuals and organizations would stop digging into the detailed information of financial products or spending time in the jungle of customer care. This will dramatically reduce a brand's visibility. Banks would therefore have to deal mainly with digital gatekeepers, as individuals could almost completely relinquish organizational tasks with the help of personal AI assistants.

In addition, automation will change the nature and scope of financial services. This would have an impact on the entire economy and lead to service-oriented value generation. Financial transactions would manifest themselves on another level, not in the form of isolated purchases, but as networked payment patterns for individual solutions.

Case study: Impact of autonomous driving on financial services

Autonomous driving and new mobility concepts are described as examples of the shift in demand due to new technologies. Car sharing enables individual mobility without the need to buy or maintain your own vehicle. According to the analysis, this will trigger a relocation of property to use, which also affects the adjacent financial services.

Should centralized vehicle fleets establish themselves as the dominant form of mobility, consumer credit for buying or leasing a car would no longer be necessary, including subsequent credit agreements, liability insurance, vehicle insurance and related insurance. Consumers would only rent a vehicle for a certain time or a certain number of kilometers.

However, the need for financial services should not disappear as a result. Instead, new services would be added or replaced with old ones. These act as an intermediary between the vehicles and service providers such as telecommunications, software sellers, screen manufacturers, telecommunications companies and, of course, insurance companies that will insure a vehicle fleet and the interior of the vehicle.

The interaction of consumers with financial services will take place in two ways: payment of a mobility allowance and payment of additional services or functions indoors.

Financial service providers will therefore still play a prominent role in a service-oriented economy, even if the context and the specific characteristics change significantly.

Financial service providers have to adapt

The example makes it clear that the financial sector is facing a collective and often underestimated challenge that could lead to a fundamental shift in the competitive topography. Competitors like Neobanks and BigTechs are poised to take the opportunity to reshape, redefine, and dominate the market to their advantage by offering financial services that meet the specific needs of a service-oriented economy.

Banks, savings banks and other financial service providers have to adapt in order not to lose customer contact, business and income.

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