SYDNEY, May 23, 2016 /PRNewswire/ -- Australia's development as a leader in Fintech innovation will require concerted effort from government agencies and established financial institutions and will involve partnerships and research collaboration between banks and startups. It will also present many diverse and lucrative growth and development opportunities for ICT companies that will help form the necessary ecosystem for a leading Fintech market.
Data and connection security will be the most significant challenge for Fintech companies in Australia; largely because mobile payments make up the majority of the revenues of all the Fintech segments. Reliable security will be a key issue and an important selling point to ensure success as this will allow Fintechs to build consumer trust in order to grow and compete with established institutions. Australian Fintechs need to partner and collaborate with security vendors and ICT companies to improve the security and connectivity of increasingly mobile-centric financial services and to protect a user's financial data.
Frost & Sullivan's study, Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020 highlights the fact that Fintech success depends on security vendors; and many ICT and telecommunications opportunities will be security focussed. APAC revenues for cyber security in the banking and finance security technology market are expected to grow at a CAGR of 7.31% over the forecast period of 2015-2020.
Saranga Sudarshan, Research Analyst, ICT Practice, Frost & Sullivan Australia & New Zealand says, "Established institutions already have large security expenditures, with security systems and protocols built over many years. Attacks against these institutions are highly unlikely and more unlikely to be successful. However, the sensitivity of financial data, unlike any other kind of personal data, will mean security will be a concern at every other stage of a product's delivery chain."
Sudarshan added, "End-user attacks are the highest priority given that the decentralisation of personal smart devices, whether they are wearables, smartphones or personal computers, will make storage of end-user credentials the most vulnerable to security attacks. Uniform security protocols will not be implemented without significant standardisation of operating systems and version updates."
Biometric security will be the future of mobile security and Fintechs will drive the expansion of biometric security. Biometric security protects an individual's financial data and reduces vulnerability to cyber fraud or physical fraud as well as weak or misplaced passwords. Biometric security will make the user themselves the strongest element in a security measure. Frost & Sullivan anticipates that biometric authentication will be the future of mobile security, with extensive biometric security features developed or announced for implementation in all new smartphones over the next 18 months.
Blockchain development for financial services has attracted various ICT companies to develop blockchains with different revenue models. Some companies have opted for a blockchain-as-a-service model, while others have opted to sell cryptocurrencies. Audrey William, Head of Research, ICT Practice, Frost & Sullivan Australia & New Zealand says, "ICT companies involved in blockchain development include Ripple Labs with their direct partnerships with international banks, and their Interledger project; Microsoft and Ethereum with their EthBaaS, or Blockchain-as-a-Service product; IBM working with Digital Asset Holdings, to develop Business Logic Engines to embed blockchain technology into a business's exiting transaction systems and Intel is developing blockchain technology with internal trials for the benefit of the Hyperledger Project."
Analytics is one example of a software suite that is available to Fintechs and established financial institutions. "The cloud computing capability of Watson Analytics presents a possible model for other AI platforms aimed at the financial services sector. AI hardware architecture is the foundation for customised AI software, and Facebook's Big Sur is an example of an AI hardware architecture that allows Fintechs and established financial institutions to build their own AI systems. Customised AI systems would allow a range of AI solutions to compete in a market of 'off-the-shelf' AI Analytic packages," stated William.
Data centre requirements will be unique for Fintech, and there will be huge opportunities for data centre providers offering tailored co-location services, managed hosting services and cloud storage. The rapid growth of Fintech companies offering personal and business finance will present opportunities for both wholesale and specialist data centre providers.
Telecommunications companies and system integrators have the opportunity to offer managed services across security, cloud, data centre in areas such as digital payments, blockchains, biometrics and artificial intelligence.
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To listen to the webinar - Fintech Disruption in Australian Finance - How Fintech will radically change the face of Financial Service, please follow this link https://www.brighttalk.com/webcast/5567/200515
Frost & Sullivan's report, Fintech in Australia – Trends, Forecasts and Analysis 2015 - 2020, forms a part of the Frost & Sullivan Australian Research program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. For media queries and more information please send an e-mail with your contact details to Donna Jeremiah, Corporate Communications, at firstname.lastname@example.org.
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