FinTech in the Banking Industry

Goals

Provide an overview of the FinTech in the banking industry. Include details specifically on Know Your Customer (KYC) technology, anti-money laundering systems, market value, technology/system trends, future insights, etc. This information will be used to produce data points for a grant application.

Early Findings

Know Your Customer (KYC) Technology

  • FinTech companies with more than 50 employees have KYC teams made up of 7-10 employees. For those with less than 50 companies, KYC teams are typically made up of either 1-3 or 4-6 employees.
  • Approximately 30% of FinTech companies have KYC teams made up of 1-3 employees, 30% have KYC teams with 4-6 employees, and 40% have between 7-10 employees on their KYC operations teams.
  • Growth in the KYC team division for FinTech companies is largely driven by:
    • Number of existing customers: 60%
    • Number of new customers: 80%
    • Percentage of customers that have to be manually reviewed: 50%
    • Number of geographies that the company operates within: 10%
    • Number of regulatory jurisdictions the company operates within: 10%
    • Company direction/products offered: 10%
  • The most commonly sought after features for KYC technology in the FinTech industry include:
    • Integrated third party vendor solutions: 90%
    • Integrated sanctions/PEP screening: 80%
    • Reports for auditors: 80%
    • Open API for workflow management: 70%
    • Integrated risk and fraud: 70%

Anti-Money Laundering (AML) FinTech Software in Banking

  • One of the major issues with AML technology in banking is the reporting threshold of $10,000. This value makes it difficult to identify illegal profits, sometimes resulting in false alerts.
  • Blockchain technology is suspected to be a possible solution to confirming, tracing, and verifying payments in the banking industry. This goes hand-in-hand with machine learning FinTech, which would help AML software to learn and predict possible instances of fraud.
  • AML and KYC technology are expected to grow together to ensure that banks are not accepting customers that would be more likely to commit money-laundering or fraudulent bank activities.

FinTech in the Banking Industry

  • Banks report that some of the largest threats from FinTech include but are not limited to:
    • Loss of market share: ~68%
    • Pressure on margins: ~67%
    • Information security/privacy threat: ~57%
    • Increase of customer churn: ~50%
    • Other: ~4%
  • FinTech is largely expected by experts to improve the "back-end of financial services" in the banking industry, specifically by validating customers, products, and feedback.

Proposed next steps:

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As the initial research showed that data related to KYC technology for fintech and banking is available, we suggest moving forward with additional research that will work to identify 5-7 insights regarding how banks use the fintech KYC technology for their betterment, when banks use it and how, the types of banks that are using it more nad more, and if located pre-compiled, even the market size of KYC fintech for the banking industry in the U.S. or globally. Each insight located will be backed with 3-4 data points, and where possible, we will include hard data/statistics to supplement our findings.
We also suggest moving forward with research regarding how anti-money laundering software is used in the banking industry. For this option, we will again work to locate 5-7 insights regarding how this technology is used by banks, what the software protects from and how, the types of institutions that are using it, any metrics of success, and if located pre-compiled, even the market size of this software in the banking industry in the U.S. or globally. For each insight located, we will include 3-4 data points to supplement, and we will include hard data/statistics to support our findings as available. PLEASE NOTE: If you are specifically interested in the U.S. market, global market, or market for another country/region, please let us know in the comments.
As a third option, we believe that moving forward with research that provides a broader overview of FinTech in the U.S. or global banking industry would help to provide additional context into this market. For this option, we will specifically locate 5-7 insights related to the types of fintech technologies (not including KYC or anti-money laundering software) that are used in the banking industry, why/how, any metrics of success, trends related to the use of fintech in the banking industry, threats from fintech to the banking industry, trends related to the expected future of fintech in the banking industry, and other similar information. For each insight located, we will include 3-4 data points to supplement, and we will include hard data/statistics to support our findings as available.