Capital Markets innovation and the FinTech landscape

Impacts of global megatrends
Believe it or not, the future for investment
banking has the potential to be bright
Disruption driven by global megatrends is fundamentally
changing the way the world works — a development examined in
detail in the EY report Megatrends 2015: making sense of a world
in motion 4 . We have identified three megatrends that support
the view that the capital markets industry can track back to more
acceptable levels of ROE.
With changes in demographics, the explosion of new
business creation, rising prosperity, maturing markets and
hyper-connectivity of society globally, the demand for capital
markets products and services is set to increase.
The fundamental purposes of capital markets firms — to
provide access to capital, facilitate trade and manage risk —
are reinforced rather than negated by the megatrends.
We do not see any of these trends reducing the need for the
types of services provided by investment banks, although
as we discuss later in this report, the ecosystems delivering
these products and services will inevitably evolve.
The global rise of the entrepreneur
The growth and prosperity of all economies — whether emerging
or mature — remains highly dependent on entrepreneurial
activity. Entrepreneurs are the lifeblood of economic growth:
they provide a source of income and employment for themselves,
create employment for others, produce new and innovative
products or services, and drive higher levels of economic activity.
While some entrepreneurial activity around the world is still
driven by necessity, “high-impact” entrepreneurship — once
largely confined to mature markets — is now an essential driver
of economic expansion in rapid-growth markets as well. In many
cases, these high-impact entrepreneurs are building innovative
and scalable enterprises that capitalize on local needs and serve
as role models for new entrepreneurs.
The face of entrepreneurship is also changing. Across the world,
entrepreneurs are increasingly young and female, and many of
the new enterprises founded today are digital from birth. Access
to funding remains the primary obstacle for entrepreneurs from
all markets and at all funding levels, with microfinance beginning
to generate interest among institutional investors. It’s clear that
capital markets organizations have an important role to play in
the success of these entrepreneurial businesses as they grow,
and by supporting financial inclusion globally.
19%
5
Annual rate of growth in
microfinance expected
over the next five years
US$14b
2019
US$5.7b
2014
Rising from US$5.7b in 2014 to
nearly US$14b in 2019.
Source: Microfinance Market Outlook 2015: Growth driven by vast market potential,
responsability, November 2014.
4
www.ey.com/Publication/vwLUAssets/ey-megatrends-report-2015/$FILE/ey-megatrends-report-2015.pdf.
5
www.responsability.com/funding/data/docs/es/10427/Microfinance-Market-Outlook-2015-DE.pdf.
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