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This short report examines the ways in which local CFA Institute member societies in the EU and their members have been engaging on the development of financial technologies, their perceived impact, and the benefits and challenges stemming from the increasing adoption of fintech in the investment industry as well as the implementation of several pieces of EU legislation on digital finance. The report is based on an informal survey conducted with the Advocacy Committees of local societies in the EU. Survey respondents gave their opinions on how the financial sector is expected to evolve in the future as financial technologies continue to develop.
The main takeaways of the new survey are as follows:
- Fintech developments are likely to create more employment opportunities in the areas of portfolio management, relationship/wealth management, and data science.
- The proliferation of financial technologies is expected to mainly result in cheaper financial services for investors. Other possible outcomes include a better customer experience, an increase in the range of offerings of financial products and services, a higher rate of customer turnover, and increased competition. However, the survey also highlighted a few investor protection concerns.
- The current legislative framework needs some adjustments to deal with the challenges emerging from greater use of fintech innovations in the industry.
- The main benefits of automated financial advice services are likely to be lower costs and easier access to financial advice for individual investors, while the principal risks include flaws in the automated financial advice algorithms, privacy and data protection concerns, and mis-selling practices.
- Blockchain technology is expected to have the most important impact in the financial services sector in the next five years.
- Financial institutions have been increasingly looking at big data to analyse and better predict their clients’ behaviour. Such technology has especially been used to manage operational and compliance risks.