The financial services industry is in the midst of a sweeping transformation due to heightened regulation, technological disruption, and changing demographics. What changes can we expect to see across the sector in response to such forces over the coming decade?

Senior financial practitioners from across North America share their predictions in The Technological Revolution in Financial Services: How Banks, FinTechs and Customers Win Together (University of Toronto Press, 2020).

This new book, co-edited by Richard Nesbitt, an adjunct professor at the Rotman School of Management, and Michael King, the Lansdowne chair in finance at the University of Victoria’s Gustavson School of Business, gives readers an inside look at how lowering barriers to entry has increased competition within today's financial industry.

Newcomers are challenging banks and incumbents to the benefit of end-consumers. These entrants range from entrepreneurial financial technology (fintech) startups to large, non-financial technology-based companies. While the ongoing fintech-versus-incumbent debate is explored in the book, the authors refuse to take a side. Instead, they contend that the most successful banks and incumbents will partner with fintechs to provide a better experience to retail customers and small businesses.

Throughout the book, contributors offer a range of actionable insights on the structural forces transforming financial services, the new strategies, technologies, and business models entering the space and succeeding in the fintech era.

Notably, a few of these contributors are affiliated with the Rotman School.

In his chapter (Banking and Finance since the Global Financial Crisis), Tiff Macklem, former dean of the Rotman School, reflects on the many times he’s seen the global financial system transform. Macklem, who now serves as governor of the Bank of Canada, details his experiences as the senior deputy governor at the Bank during the 2008-2009 global financial crisis. He defines what he sees as the main drivers of change in the industry: crisis, technology and climate.

Meanwhile, in their chapter (How the Global Asset-Management Industry will Change), Nesbitt and Satwik Sharma (MBA’16), consider the forces that are changing the way investments are managed. They explore the growth of ETFs and passive investing, the increasing focus on social impact investing and emerging technologies.

In another piece (Bank Strategy and Innovation Utilizing Technology), Nesbitt presents his ideas on how technology fits into a bank’s operations and outlook. He makes the distinction that technology is a tool for a bank to employ—not core to its strategy. At the same time, embracing technology and innovation will be critical to a bank’s competitiveness.

Ultimately, the book makes clear that successful incumbents will have to shift their focus. Working with fintech collaborators, they'll leverage new technologies to give customers a better experience at a lower cost. King and Nesbitt's collection also addresses systemic overhauls—incumbents will need to transform their cultures, incentive structures and governance to meet these challenges.

The Technological Revolution in Financial Services  is not only a comprehensive account of how fintech is upending today's financial services industry. King and Nesbitt provide readers both within and beyond the sector with a coherent map to the digital landscape ahead.

The Technological Revolution in Financial Services: How Banks, FinTechs and Customers Win Together . Edited by Michael King and Richard Nesbitt