KPMG: There are 9 major trends in the development of fintech, and the big model has a profound impact on the industry paradigm

Interface News Reporter | Liu Chenguang

Interface News Editor |

On 9 January, KPMG released the 2023 KPMG China Fintech 50 Report (hereinafter referred to as the report). The report proposes 9 major trends in the current development of fintech.

First, in terms of annual trends, the development of financial models will have a profound impact on the paradigm of the fintech industry. In the era of mobile Internet, China's fintech has made numerous innovations in the fields of mobile payment and digital credit, and has been at the forefront of the world. Domestic manufacturers are actively carrying out the layout of financial models, and relevant enterprises need to build competitive advantages by relying on "having data" and "understanding scenarios".

In the future, the wide application of financial models will have a disruptive impact on the current industry paradigm in the following aspects: the transformation of AI cognition and concepts, the reshaping of customer service processes and experience, the improvement of risk management, the improvement of financial service efficiency, and the innovation of financial business forms.

Huang Aizhou, Head of Fintech at KPMG China, told Jiemian News that in the process of digital transformation of the financial industry, three pillars are needed for the implementation of vertical models in the industry, namely algorithms, computing power and data.

Trend 2: In terms of integrated financial technology, technology investment pays more attention to output energy efficiency, and the output of technology in the industry has shifted to ecological empowerment. With its technological advantages and innate financial industry genes, integrated fintech companies are actively embracing a new round of technological development opportunities brought by large models. On the one hand, it will continue to increase investment in science and technology, but pay more attention to business orientation and precise focus in terms of goals and methods, and on the other hand, it will continue to export its scientific and technological capabilities to its peers, and transform from traditional technology empowerment to all-round ecological empowerment in the direction of service.

Trend 3: In terms of wealth technology, AI will help wealth management innovation, and the autonomy of institutional core systems will be accelerated. Since the end of 2022, the explosive development of AIGC has brought huge imagination to the financial industry. Fortune technology companies apply the data and experience accumulated in AI application fields to financial model training to provide support for wealth management business scenarios such as investment advisory, investment research, and marketing.

KPMG expects that as AIGC technology matures, wealth managers will explore more application scenarios for large models to improve efficiency and service upgrades, while AIGC will still need to be cautious in providing investment advice directly to clients due to unclear regulations and issues such as data security and data privacy.

On the other hand, wealth technology companies actively provide the latest technology solutions for large and medium-sized wealth management institutions, and gradually improve the efficiency, stability and autonomy of core systems by leveraging the modularity and decentralization of distributed technologies.

Trend 4: Insurtech is evolving to risk reduction management, combining with industrial upgrading to continuously expand service boundaries. KPMG pointed out that the current risk management principles of the insurance industry have gradually evolved from risk equivalence management to risk reduction management. On the one hand, insurtech companies rely on the wide application of new technologies to transform the original uninsurable risks into insurable risks, and relax the original restricted underwriting conditions to comprehensive underwriting, which will create a broader insurance market space. On the other hand, technology no longer relies on insurance to exist, but penetrates into the development process of all walks of life, derives new risk management demands in the development process, and continuously expands the service boundaries of insurance technology by combining it with industrial upgrading.

Trend 5: In terms of inclusive technology, KPMG pointed out that the symbiosis of data and reality and digital platform services have accelerated the development of inclusive finance. The symbiosis of data and reality will accelerate the development of inclusive finance, so as to achieve the high-quality development goals of inclusive finance, such as more universal basic financial services and more convenient financing for business entities. In addition, through the digital service platform, micro, small and medium-sized enterprises can widely access digital resources, build digital and intelligent business processes, meet the ever-changing market demand, and accelerate the digital and intelligent transformation of small and medium-sized enterprises.

Trend 6: In terms of supply chain technology, multiple parties have joined hands to develop a new blue ocean of supply chain finance, and scenario-based product innovation has begun to appear. With the vigorous development of the digital economy, the digital penetration rate of supply chain finance is gradually increasing. The supply chain technology platform has accelerated its efforts in scenario-based business, and it is expected that more scenario-based innovative products based on data credit will appear in the future, and the traditional right confirmation model will begin to weaken. In addition, many large conglomerates have responded to the policy call and accelerated the pace of building supply chain platforms, and financial institutions have also paid more attention to cooperation with core enterprises and third-party platforms for high-quality supply chain technology.

Trend 7: In terms of payment technology, mobile payment is applied in innovative scenarios, and cross-border payment opens up a new chapter in going overseas. From the perspective of the C-side, the third-party payment platform expands its business by exploring new scenarios and product innovation, and from the B-side, the mobile payment platform empowers and provides integrated services based on payment functions. In addition, in addition to providing customers with payment services, the cross-border payment platform also provides services such as foreign exchange and enterprise foreign exchange risk management, as well as platform store opening, global acquiring, overseas marketing, supply chain financing and other services, providing customers with integrated services to enhance customer stickiness.

Trend 8: In terms of RegTech, RegTech is expected to improve regulatory efficiency with the help of large models. The rapid development of emerging technologies such as AIGC provides imagination for the development of financial regulatory technology, which will increasingly rely on technological means to achieve more efficient and accurate supervision. At the same time, the development of RegTech will also promote fintech innovation and empower the financial industry to deepen its digital transformation.

Trend 9: In terms of platform technology empowerment, a new round of development opportunities has opened. KPMG pointed out that at the current stage, trends such as information innovation and going overseas are highly certain, and actions such as "× of data elements" and "high-quality development of computing infrastructure" are steadily advancing, which coincides with the opportunities for technological change brought about by financial models and generative AI, which is expected to drive the continuous release of the value of China's fintech, further influence the global market, and promote the high-quality development of digital finance.

Stephen Cheung, Vice Chairman, Asia Pacific and Head of Finance, China, KPMG China, said that the digital transformation of the financial industry is seen as an important way to become a financial power, and that fintech, as the core technology driver of digital transformation, is expected to lead the revolutionary transformation of the fintech sector with the help of big data, artificial intelligence, blockchain and other technologies, especially the rise of large-scale model technology. Looking ahead, fintech companies need to keep up with cutting-edge technology trends, grasp development opportunities, and play a greater role in promoting the digital transformation of the financial industry, serving the real economy, and preventing financial risks.