Sectoral Watch: Financial services and the banking sector

In May 2021, the Advanced Technology for Industry project (ATI) published its Sectoral Watch titled ”Technological trends in the financial services and the banking sector”. The report aims to define the relevance of advanced technologies in the financial services and banking sector. The Sectoral Watch explores this topic through patent analysis and data on private equity investments, skills, and technology uptake.

Advanced technologies can play a crucial role in achieving the goals of the financial sector in the field of cost reduction, the detection and prevention of fraud, improved security and risk reduction. The report provides an analysis of the current situation and describes and discusses the present and potential effect of advanced technologies such as Artificial Intelligence (AI), blockchain, big data, the cloud and cybersecurity.

In the area of FinTech, the report looks at private equity investment and start-up creation. It examines the funding of private equity in FinTech in the EU27 and compares them to venture capital and private equity investments in the US and China. One of the findings is that the US has the highest amount of private equity investments. However, when looking at the average funding amount per company China and the EU27 perform better. In addition to funding, the Sectoral Watch also looks at the different European FinTech start-up hubs and their expertise. Estonia, for example, is relatively dominant in Blockchain and Germany has a relatively high concentration in AI.

In addition, the report furthermore highlights the supply and demand for professionals with advanced technology skills within the financial services and banking sector. Most professionals in the EU27 registered on LinkedIn and employed in financial services and banking work in Big Data, although skills relating to AI and the Internet of Things are quickly gaining importance. In terms of location, relatively most advanced technology professionals work in the Baltic states and Nordic countries.

The Sectoral Watch moreover anticipates that the FinTech market will continue to grow significantly in the coming years. Investments will focus on solutions that improve operational efficiency. On the other hand, cybersecurity will be one of the focal points. The growth in cyber threats has underlined its importance, making it a top priority in both the short and long term.