Financial services technology will enable consumers to bypass intermediaries such as advisers and deal directly with product manufacturers, according to Australian Securities and Investments Commission (ASIC) chairman, Greg Medcraft.
Addressing a conference in Singapore, Medcraft said he believed financial services technology had the potential to change the face of the financial services sector both in the region and globally and that a tipping point had been reached where potential was translating into real action.
However the ASIC chairman acknowledged that there were risks associated with the advance of financial services technology, noting that "greater customer and investor empowerment without appropriate understanding of the risks of the products and services they are accessing raises the risk of investor and consumer harm".
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"There will be new channels through which fraud may be perpetrated both within and across borders," he said.
Looking at what he expected to be the resultant changes to the market, he said he believed the first was empowering financial consumers and investors to take greater control over their financial affairs.
"Not only will consumers and investors benefit from more choice and cheaper products and services, they will also be able to deal directly with product manufacturers (for instance) without going through an intermediary," he said.
He said there was also the real opportunity for data to be used more effectively, in better understanding consumer and investor needs and risks and designing better tailored products and services.
Medcraft said he believed technology was challenging the business models of incumbents and that although those incumbents were reaping the cost and efficiency benefits of technology, they would also need to reflect on their business models.
"This is a particular challenge for incumbent banks, particularly those reliant on legacy systems. They are facing real threats to their share of customers' wallets, as start-ups increasingly offer more direct access to particular products and services at a lower cost and/or a better service," he said.
"These businesses will need to consider whether they invest in their own technology to provide the products and services themselves, or look for alliances with fintech entrepreneurs."