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2030 French FinTech Scenarios

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Financial Technologies are about to transform the way we bank, and they have just begun. Thirty years ago, the advent of communication technologies has revolutionized capitals markets and merely Finance. Financial products’ increased accessibility has made markets more liquid than ever, thus increasing trade, growth and development. Since then, human have created technologies which still was sketched in Fictions books few decades ago. Giant calculators, Internet, Nano-technologies and micro-computing are today about to change our entire world. Finance is not left aside, quite the contrary; it is actually deeply concerned by these technologies which progress exponentially and create opportunities until then unimaginable. Financial technologies’ companies, called FinTech embody this revolution’ outlooks. Global investments inside those start-ups have doubled from 12 billion in 2014 to 22 billion in 2015. They had just tripled from their 2013’s level (4 billion) and this trend may keep going yet a while. The last revolution had allowed bank to bank better. Instead, this one should allow people to bank, but without bank. That the main point of this revolution, it is disruptive. In this paper, we are going to assess potential threats that the FinTech trend could have upon traditional French Banks; How French could perceive this change, how FinTech could grow and how banks could cope.

Publié dans : Économie & finance

2030 French FinTech Scenarios

  1. 1. 2030 French FinTech Scenarios To what extent disruptive financial technologies could impact the French banking sector? Nicolas AUCONIE 29/04/2016
  2. 2. 2030 French FinTech Scenarios 1 SID 1519049 ANGLIA RUSKIN UNIVERSITY Dissertation Declaration Title of Award BSc (Hons) Business Administration Date Friday, April 29, 2016 SID Number 1519049 Name of Supervisor Elisa Alt Title of Dissertation 2030 French Fintech Scenarios: To what extent financial disruptive technologies could impact the French Banking Sector? Word count 11154 DECLARATION: I declare that the following work is my own and that the material contained herein has not been substantially used in any other submission for an academic award. Signed: Date: 29/04/2016
  3. 3. 2030 French FinTech Scenarios 2 SID 1519049 Abstract Financial Technologies are about to transform the way we bank, and they have just begun. Thirty years ago, the advent of communication technologies has revolutionized capitals markets and merely Finance. Financial products’ increased accessibility has made markets more liquid than ever, thus increasing trade, growth and development. Since then, human have created technologies which still was sketched in Fictions books few decades ago. Giant calculators, Internet, Nano-technologies and micro-computing are today about to change our entire world. Finance is not left aside, quite the contrary; it is actually deeply concerned by these technologies which progress exponentially and create opportunities until then unimaginable. Financial technologies’ companies, called FinTech embody this revolution’ outlooks. Global investments inside those start-ups have doubled from 12 billion in 2014 to 22 billion in 2015. They had just tripled from their 2013’s level (4 billion) and this trend may keep going yet a while. The last revolution had allowed bank to bank better. Instead, this one should allow people to bank, but without bank. That the main point of this revolution, it is disruptive. In this paper, we are going to assess potential threats that the FinTech trend could have upon traditional French Banks; How French could perceive this change, how FinTech could grow and how banks could cope. ________________________________________
  4. 4. 2030 French FinTech Scenarios 3 SID 1519049 Table Abstract.......................................................................................................................................2 Introduction ................................................................................................................................4 Methodology...............................................................................................................................6 Introduction to methodology .............................................................................................................6 Literature Review’s methodology: How academically identify key ideas ..........................................6 What is Scenario Planning, how we use it? ........................................................................................6 How we have proceeded to correctly assess main trends?................................................................8 1) We have ensured to correctly assess key macro-environmental factors concerning the French Financial services industry. .................................................................................................8 2) We have ensured to learn enough, in order to globally appreciate trends and ways they could drive the future. ....................................................................................................................8 3) We have looked forward current behaviors of financial entities to extract the core points of our scenarios and strengthen our Drivers................................................................................10 Literature review ....................................................................................................................... 12 Introduction to the literature ...........................................................................................................12 Why literature has suggested the Scenario Method the more suitable?.........................................12 How Literature has shaped our scenario planning? .........................................................................14 1) Research Horizon: What scope for a long term exponential trend? ....................................14 2) Driver prospection: How a relevant literature has suggested ways to answer?..................14 Scenarios Building...................................................................................................................... 19 Scenario Map ....................................................................................................................................19 “Digital Banks by 2030”.....................................................................................................................20 Why Traditional French Banks could become Digital by 2030?....................................................20 “Big Vs Small by 2030”......................................................................................................................23 When former Big become threaten by new Small .......................................................................23 “Decline of Banks by 2030”...............................................................................................................25 In a fast growing society of low marginal cost, being big is not so well .......................................25 “Living in the past by 2030”..............................................................................................................27 Do not respond is tantamount to letting die................................................................................27 Conclusion and recommendations.............................................................................................. 29 Conclusion.........................................................................................................................................29 Recommendations............................................................................................................................29 Endnote..................................................................................................................................... 31 Bibliography .............................................................................................................................. 32
  5. 5. 2030 French FinTech Scenarios 4 SID 1519049 Introduction Financial technologies are mostly founded on few technologic possibilities. Big Data storage allow individuals to digitally store Tera-octets of information in their pocket. Statistical Analysis’s tools are increasingly stronger and supported by complex algorithms (IBM Big Data & Analytics Hub Jul. 14, 2015). Internet connects the entire world within a one single network were information could be instantaneously shared. Finally, the Block Chain technologies highlighted with crypto-currency like the Bitcoin is turning out being a huge potential solution to disintermediate trades, transactions and payment with a peer-to-peer proof mechanism, therefore drastically reducing costs. All these technologies are shaping an environment conducive to improvements in Finance. As we all know since 2008, Finance is not as responsible as it could be. Over securitization and underlying behaviors have led to a crisis putting down the entire occidental economy (Khan Academy). Causes are known; lack of transparency within Financial Institutions, lack of regulation from official market authorities and lack of responsibility in many professionals’ behavior. Basically we know, but the main interested, banks, hedge funds, even regulators are still rather under acting (Ferguson, 2010). FinTech companies embody the opportunity to finally shift toward better patterns and therefore improve what need to be improved in financial mechanisms. There are basically five kinds of FinTech. The first one is “Payments and Transfers”. Based on high safety crypto-technologies, it allows people to pay or exchange money directly with their phone or various electronic device everywhere for almost no-fees. Block Chain technology evoked above is crucial concerning those FinTech’s development. The second kind of FinTech is “Lending and Financing”. Those are creating web platforms were Lender can meet borrowers directly to fund a project or lend an amount of money without intermediary. Crowdfunding and Peer-to-peer lending are the most famous. Private equity or financial participative communities are also part of this FinTech category. The third one is “Retail Banking” FinTech. As its name suggests, it consist in the way to bring together every tools necessary to perform usual banking activities as account management, transfers or daily check-in. The main advantage of those is that they completely replace traditional bank’s role in the daily banking activities. The fourth category of Fintech is a bit different. It doesn’t properly concern bank, but insurance instead. Nicknamed InsurTech, those companies are using especially Big Data and powerful statistical analysis tools to better frame insurance need around the world and correctly provide services more diversified, more flexible. Last two FinTech’s categories are quite closed and are both intended to provide to everybody a mean to place money in order to make capital gains. In the one hand “Financial Management” FinTech offer flexible and customizable investment strategy, and make accessible analysts’ or robot-advisor’s services for a derisory cost. In the other hand, “Markets and Exchanges” FinTech companies provide intuitive and powerful digital Trading platform. Through those interfaces, anyone can trade stocks, currencies, indices and even derivative products merely via an internet connection. Despite all this advantages, FinTech still mostly remain Strat-up and only a few has substantially reach a market. However, this trend must keep going higher each years and one day or another, will deeply impact financial activities. This trends takes different extents according to policies and context of the country where they are located. In Europe, Britain and its FinTech Innovation Lab are first concerning
  6. 6. 2030 French FinTech Scenarios 5 SID 1519049 FinTech investment (42% of total European investment) followed by Northern Countries, Netherlands and Germany (Accenture, 2016). France which is yet an historic economic power (Sixth world economic power) is in sixth position behind Russia in the European FinTech investment ranking. This weak position illustrates deep French structural issues. Indeed, a complex legislative process, traditional strong politic cleavage and social-focused policy make disruptive improvement less easy to spread because disrupting many social acquis. To illustrate, the revision of the Labor code initiated by Government by the end of 2015 currently face a huge opposition embody by the movement “Nuit Debout” bringing together each day since one month thousands of citizen across French main town’s public places. Yet this revision would have been critically useful to the development of French Fintech’s Start-up which need flexibility, but French have decided the contrary. French Financial organizations therefore need useful tool to assess a quite uncertain context. This paper is intended to provide useful recommendations to French Financial organizations through a scenario planning framing future eventualities by 2030. As we will soon find out, Scenario Planning is especially useful concerning this assessment. In order to correctly structure our development and step by step expose the impact FinTech could have on French traditional Banks, we will proceed as described in the following table. Methodology This first part will precisely describe the Scenario method we use and evidence the way we proceeded to collect a relevant literature. Literature Review This second part will highlight the main involvement of the literature and should evidence the way it drives our reflection. Scenarios This third part will expose our scenario key feature and develop them throughout four different alternatives stories. Recommendations This final part will provide advices and recommendation based on scenarios outcomes. Relevant conclusions will be underlines in order to make decision- processes more efficient. ________________________________________
  7. 7. 2030 French FinTech Scenarios 6 SID 1519049 Methodology Introduction to methodology Into this chapter, we will cover the overall methodology concerning this piece of work, ensuring to detail the prospective process and the scenarios method to get a clear overview of the process providing us axes to our answer our research question. We will first find out the way we develop the literature review method. Then, we will cover the core analysis method explaining precisely how our research process consists, from the methodological construction of scenarios founded on Horizon and Drivers to the key features of these last within the final stories. Furthermore, we will explain our research methodology and the way we use literature to bring out relevant conclusions and recommendations based on consistent scenarios. Literature Review’s methodology: How academically identify key ideas In this work, the literature review takes place voluntarily after the present methodology section. Thus having in mind in the first place the core methodology of the research and the relevance of the scenario method concerning this research, we will further be fully able to figure out through the literature review the core academic implications and outlooks of this last. Therefore, we will use various outcomes to evidence gaps related to our research question and develop our scenario strategy. In a consolidative way of mind, we will explain how relevant references have feed our strategy in order to academically evidence the fact that this piece of work improve decision makers’ ability to adapt their mindset in contemporary French financial services companies. With publications whose major part was published in 2013-2016, we ensure an updated analysis, questioning the more interesting recent publications about financial technologies and banking development strategies for next decades. Above all, it shall highlight the weight of main external and internal factors influencing our work area and consequently facilitate the scenario construction processes by highlighting Drivers and consistently research horizon. What is Scenario Planning, how we use it? Scenario Planning has been introduced in the modern landscape through military decision processes needed to be enhance and more long-term focused. Hermann KAHN (1922 – 1923) is considered by most as Father of the way to formally think about the future in order to apply results to present decision processes. His main studies having concerned the Cold War, he is especially recognized as the one who study eventual consequences of a nuclear war. Its work has inspired plenty organizations which has viewed in this possibility to largely-frame thee future, a strong tool to make decisions in the present. Among the main ones, the Royal Dutch/Shell have used scenarios to create strategies to reach
  8. 8. 2030 French FinTech Scenarios 7 SID 1519049 Scenario 1 Scenario 2 Scenario 3 Scenario 4 A1 B1 A2 B2 A1 B1 Driver 1: A2 B2 Driver 2: exogenous markets. According to the Strategic planning management (Exploring Strategy, Pearson 2014), Scenarios are assessing future by a delimited Horizon. The research horizon is characterized by a range of eventualities depending on what has happened from today to the horizon. Given that an infinity of things (Events, Behaviors, Trends, …) could indirectly influence the horizon and consequently create an infinity of alternative futures, the core work concerning Scenario Planning is isolate those which will Drive our organization the most; the Two Drivers. Unlike Givens which are factors partially driving it, that we could forecast at the horizon or with a correlation with another one forecastable at the horizon, Drivers are Uncertain at the Horizon and non-correlated between themselves. Once Both Main Drivers are isolated, we need to use them in order to create a scenario map, the precise one which is going to be our Scenario Building’s foundations. This future compass’s feature is described in the following graph and, shaped by the crossing of Main Drivers both characterized by two alternative outcomes basically opposed. (from ETUI, 2014) (from ETUI, 2014)
  9. 9. 2030 French FinTech Scenarios 8 SID 1519049 How we have proceeded to correctly assess main trends? 1) We have ensured to correctly assess key macro-environmental factors concerning the French Financial services industry. To correctly assess potential changes that the French Financial services sector (FFSS) could undergo, it is required to collect various information like qualitative information and quantitative information which are part of the FFSS macro-environment. In a first step, as said in the last methodology, PESTEL analysis turned out especially interesting to identify key macro-environmental factors. The Strategic Planning Book strengthen this position specifying that PESTEL analysis is a useful analysis tool to bring out phenomenon influencing scenarios. Indeed, by covering Political influences, Economical, Sociological, Ecological and Legal ones, this analysis ensure analysts to completely asses environment having in mind the global overview of factors influencing a given organization. Results collected in PESTEL Analysis therefore aided us to find Givens and identify precisely those which could turn out being potential main Scenario Drivers. To complete our analysis and figure out the quantitative characteristics of French Financial Services Sector, we proceed to a data collection about individual and professional lending, deposit and various financial health key indicators’ related to FFSS. Through the FBF (French Bank Federation) figures and those from the official web statistic platform of the “Banque de France”, we get a trustfully, updated and realistic data base providing a solid quantitative framework for our scenarios. In the other hand, in a more qualitative reflection, we chose to pick up academic knowledges among reliable economic Media whose reports and publications are of exceptional quality and that should be addressed in the next parts. Basically, for conceptual reflections and information’s about hypothetic societal and global futures, we mainly used the Harvard Business Review, whose publications like “The other Disruption” (we will talk about it later) are directly related to our question and turned out being a huge source of inspiration. We have also used a range of publications and reports from the World Economic Forum, Bloomberg Business, France FinTech, Mckinsey and the Financial Brand. These sources are classified in the final bibliography and organized by Websites. 2) We have ensured to learn enough, in order to globally appreciate trends and ways they could drive the future. If one thing should be ensured to guarantee than scenarios are representative and closely similar to future which will takes place, it would be a large and global understanding of main trends driving our general society. Even if these ones do not directly concern our research question, they basically encompass and shape trends which directly concern it. On top of that, although each system or entity has its own particularities and characteristics, making them evolving towards various direction, the global environment surrounding them could affects all of us and drives them toward a specific direction whereas nothing previously suggested that kind of divergence. This phenomenon is particularly true in contexts of big changes like Industrial revolutions, wars or various event impacting society deeply on the long term. That is why in the first place, we especially pay attention to the long term environment and context. Without a clear appreciation of forces which shaped the past and
  10. 10. 2030 French FinTech Scenarios 9 SID 1519049 those will shape the future, it’s impossible to correctly forecast one single entity being part of the future (especially if this entity is as large as Financial Services Companies). We will therefore figure out how we conduct our research in order to make our mind able to project in relevant hypothetical futures, supported by solid knowledges of current main trends. From this will to globally frame current context, I decided to share my large literature around two books (more complete, more immersive and more rewarding). What mattered the most was to identify the largest theories and concepts affecting my research question through a nuanced literature. Because my question is about France, I had not just to find the most relevant books of general theories about past and future, but had to find those which care the most to French particularities. I have therefore decided to proceed as follows; To strengthen my knowledges in general economy and identify current economic context’s involvements for future, I red in the first place “Capital in the 21 century”, a book from 2013 and yet already famous in academic literature. The Author, Thomas PIKETTY is a French economist whose past analyses has made him deemed. Its biggest work (Capital in the 21 century) has made him one of the greatest contemporary economists. The economic theories supported by PIKKETY are quiet instructive and make me definitely more aware about world incomes inequalities and capital behavior throughout more than two centuries. This book was sincerely an impressive analysis upon our economic behavior led throughout centuries by societal changes. On top of that, even if the book is generally about the world, Thomas PIKETTY often refers to French societal context through famous book telling stories about former French society (?). These references analyzed through many pages are inked in a matrix crossing Society behaviors with Economic phenomenon. This allowed me to do a kind of trip back in time, consequently figuring than things were enormously different before and supporting me in the idea that they will be more different than ever in the next decades. Nothing is fixed or acquired and everything changes, even if for most, it’s hard to accept. In the second place, I felt the need to enhance my abilities to imagine how future could be, more specifically. The last PIKETTY’s Book was a perfect overview of the past, but I really needed after that to get an overview of the future. That’s why I chose as second global literature book “The Zero Marginal Cost Society”, by Jeremy RIFKIN. I had already red one of these books (The Third Industrial Revolution), which definitely changed the way I perceive my environment and make me more critic about a range of topics. Obviously I already knew that RIFKIN had an amazing capacity to identify current trends and extrapolate them in the future to create Books which seems like future’s arrays whose consistency is striking. That is why I jumped at the chance and buy his last Books (The Zero Marginal Cost Society). This Books has turned out extremely relevant as well for this work that for my general studies. Exposing the way technologies always more improved are reducing the marginal cost of goods to almost zero. From the Internet of Thing and 3D Printing to MOOC and Work’s changes, the book sketches such a consistent future according to current main trends leading progressively toward a more collaborative economy, making our globalized society more social-focusing and finally reducing world-wide inequalities on the long term. By reading both books, I have really got global knowledges I expected. From the past to understand why things are like they are today, to the future to understand how things could change and toward what direction, these books gave me an authentic and solid work-base to ink my scenarios and correctly assess main possibilities we could face in next decades. This solid framework is essential for our prospective research and make us better sensitive to fluctuation affecting future.
  11. 11. 2030 French FinTech Scenarios 10 SID 1519049 3) We have looked forward current behaviors of financial entities to extract the core points of our scenarios and strengthen our Drivers. In this present part, to get a more specific details’ data base, we now need to highlight phenomenon inked on a shorter term, timely closer to the substance of our research question as technologically as societally and whose core involvements will be the cement that academically link scenarios’ short term details to our long term global frame. First main ideas have been evidenced through a large set of reports picked out among the most prestigious economic and financial organizations. They are mainly about disruptive involvements of a new generation of financial services providers, growing in a highly advanced technologic environment. On the one hand, the report “The Future of FinTech” has suggested a notorious ability from FinTech to change small business finance in a “significant and sustainable way” thus giving us important trails concerning scenarios building. Furthermore, exposing a large overview of practices related to FinTech it strengthens our research provided a range of solutions which could be more widespread in the future we try to forecast. This report is provided by World Economic Forum which is a trustfully organization conducting many studies around the world and which release each year voluminous reports about various current economic trends. On the other hand, I read the Accenture’s report “The future of FinTech and Banking” which in a different way highlight figures suggesting the FinTech’s capacity to grow consequently in a proximate future. Moreover, by exposing the way Institutional banks has to reorganize their structure to cope with this digital innovation’s wave, this report released key information which concern our second Driver’s features. It underlines possibilities that Banks don’t apply that transformation soon enough and thus open a real gap for them which has to reimagine the way they bank to remain as strong as today. In addition to these findings, “The FinTech Ecosystem Lumascape”, report conducted by Business Insider Intelligence (Business Insider, 2016), give us a useful apprehension of five big trends which according BI’s analysts could well turn out widespread like the Block Chain involvements, the mobile ordering and payment as well as partnership-focusing behavior from banks. In the second place, looking for quantitative information about French Banks and their general state of health, we conduct a data collection through a range of paper published by The French Banking Federation (FBF) which is the professional organization which represent every Banks implanted in the country and release each month an updated version of key figures concerning French Banking Sector. Basically the FBF provides us an almost instantaneously overview of current banking behavior in France with its various papers often updated and which are: “Loans to individuals”, “Loans to small and medium businesses (SME/TPE)”, “Loans to companies”, “Loans to Economy” and finally “French Bank Sector’s key figures”. These figure underline something definitely relevant concerning the unforecastable characteristic of our first Driver. Assuredly, throughout the reading of different figures, we found out a major part of good indicator suggesting a strength position of the sector in France. Since the last year, every outstanding loans has respectively follow a +3,9% growth for credit to individual (Danton Petit, 2016), a +2,1% one for credit to SME/TPE (Céline Meslier, 2016), a +4,8% one for credit to companies (Céline Meslier, 2016) and finally a +4% growth to general Economy (Ovilier Lhomme, 2016). In a Country where 99% of people have a bank (Olivier Lhomme, 2016) account (and where 1,91% rates loans are available to small business (2,71% is the European average), these range
  12. 12. 2030 French FinTech Scenarios 11 SID 1519049 of positive figures suggests a kind of resistance which suggests the current situation rather uncertain and make the French FinTech disruption less natural than it could be in other countries. We have now perfectly figured out the Scenario Planning Method involved in this work. By getting global long term academic knowledges, we built a solid structure upon which our scenario will be crafted, thus giving them economic and societal consistency. Then by getting a specialized overview covering main components of our prospective research (French Banks and FinTech), we found out details, trends and previsions critically useful to enhance our scenarios, complete them and make them globally wealthier. Furthermore, it has aided aid us to identify our Givens and isolate our Drivers. Thus founded on a relevant literature collection, these scenarios ensure to bring out reliable recommendations and relevant answers to our research question: To what extent French disruptive FinTech companies could impact the traditional French Financial Services Sector? * ________________________________________
  13. 13. 2030 French FinTech Scenarios 12 SID 1519049 Literature review Introduction to the literature This literature review will enhance our capacity to figure out academic and strategic relevance of this scenario research. By exposing core documents and sources used throughout the documentation process, we ensure to globally evidence key gaps covered by the prospective work and strengthen our methodology choice. Furthermore, this chapter will improve our capacity to frame various concepts and theories concerning our research question and allow us to find our key methodologic features. In order to make this literature prism easier to follow and logically ink our scenarios within a global academic structure, we develop this chapter in 3 parts.First, we will explain how literature has brought out the prospective method the more relevant and why. Then in a second part, we will find out how literature has suggested 2030 as a relevant horizon choice. Finally, we will figure out how literature has given us crucial directions to undergo in order to correctly build our scenarios around credible Drivers and Horizon. Why literature has suggested the Scenario Method the more suitable? As exposed in the introduction, our research process requires a specific academic method to be fully operated. Indeed, Economic and social trends we analyze here are on the first step of a new cycle (PIKETTY, 2013). They’re either identified throughout this work as a result of the disruptive technologies of XXI century which have created a matrix Energy/Communication favorable to the advent of a New Industrial Revolution (RIFKIN, 2011). Still according to RIFKIN, those news technologies are adopting an exponentially growing behavior similar to those Moore described with his famous Curve (Investopedia, 2003). This exponential growth is followed by a large range of new technologies and especially by those whose improvements disrupt the current patterns, as illustrates the 3D printing, the computer’s computing power or yet the number of items equipped with an electronic chip connecting them into the IoT (RIFKIN, 2014). Therefore, in order to build up relevant conclusions, useful on the long term and suitable to a technologic context which changes exponentially quickly, we have to ensure a perfect understanding of the various future features which directly or indirectly influence this work’s subject; Long term Financial Trends. Having in mind such challenge, the Strategic Planning Book (Anglia, 2014) suggested Scenarios the most relevant to globally assess futures’ eventualities. According to our research question, we want to figure out what is the potential impact of Financial Technologies companies (FinTech) on the French Financial Services industry by 2030. In attempt to get a complete overview of potential future situations, we find out prospective academic method the more relevant. More precisely, this method involving the construction of scenarios, is an analysis tools relevant to take long term decisions. According to Ged Davis (European Trade Unions Institute, 2014): “Scenarios are stories about the future, but their purpose is make better decisions in the present.”
  14. 14. 2030 French FinTech Scenarios 13 SID 1519049 Moreover, as said in the European Trade Union Institute guide for scenario development, scenario method turns out especially appropriate in context of rapid improvement as the one we face: “The world is constantly changing, and these changes occur at a more frenetic pace - to the extent that the context itself has become a variable. It is impossible to predict with certainty the consequences of decisions made today. In this context, scenarios help us to cope with the uncertainties of an open future. Like a map, which enables us to guide us in space, scenarios present us different paths towards the future.” Our topic being characterized by a lightning digital revolution, whose impact are wide, many and sudden, prospective approach turn out critically appropriate. In a more strategic business mindset, the Shell Scenario Planning (Oliver sparrow, 1993) describes scenarios as quite suitable to enhance our strategic decision ability upon future situations: “It helps to add a framework to the process of strategic thinking” These method is consequently especially suitable concerning this paper, which is a tools for professionals to frame future trends and find out options to adapt their business strategies according to various eventual contexts. According to each of assumptions above, we therefore based our methodology around scenarios building and enhance our capacity of prospective thinking using the famous Shell Scenario Planning (Oliver Sparrow, 1993), the Scenario Elaboration Report of the European Trade Union Institute (Meinert, 2014), the publication of Angela Wilkinson and Roland Kupers “Managing uncertainty, Living in the future” (Harvard Business Review May 1, 2013), and the Report “Fashion Futures 2025” conduct by Forum for the Future with Levis Strauss & Co (Forum for the Future, 2010). Now we understand the relevance of the method to answer our research question, we will step by step fulfill a pathway toward our final scenario building. ________________________________________
  15. 15. 2030 French FinTech Scenarios 14 SID 1519049 How Literature has shaped our scenario planning? 1) Research Horizon: What scope for a long term exponential trend? Phenomenon we treat and analyze in this work are quiet forecastable in the short term (3-5 years), but face a lack of forecasts concerning their behavior throughout more than 10 years; A time scale through which is more difficult to forecast such major trends because involving too much macro- environmental factors whose forecasts encompass a tone of different eventualities. As you can see in the graph below (European Trade Union Institute, 2014), our research horizon is fixed on 2030. In order to provide long term strategic recommendations, a horizon at the first century’s third seems rather suitable and relevant. 2) Driver prospection: How a relevant literature has suggested ways to answer? I’m personally born in 90’s and consider myself part of this Y generation. Those which did not know the Cold War or even the constant atomic threat, those which ask “Why?” for everything and those which by internet could find all answers they desire to find. Basically I’m part of this Y generation, which main features result entirely from one simple one: Being Connected. Here is the crucial thing, this connection changes everything and each day inks an additional entity to the huge international network embodied by Internet. This trend to be always more connected is one of the main topics of the Jeremy RIFKIN book “The Zero Marginal Cost” that we quoted recently. Published in 2014, It highlights the next step of this connected revolution, the Internet of Thing (IoT). The IoT is the phenomenon whereby each items could in the future be connected to a giant Internet, as the way most of us are connected through social media, blogs or various websites. This technology combined with Big Data and Quantic Computers, allows engineers to algorithmically manage our physical environment, organize it, make it more efficient, less entropic. It could make it environmentally sustainable and even help to struggle inequalities. Utopias Hope and Fatalism Forecasts Prediction of the future Potential Scnearios Uncertainties Certainties Today Time20302020 (from ETUI, 2014)
  16. 16. 2030 French FinTech Scenarios 15 SID 1519049 Yes, the Y generation and its connected facet is a generation which more than ever, aspire to change the world for a better one more egalitarian. It could appear kind of optimistic, maybe idealistic, or even utopic for most and I agree, it is. Yet I would like we remember us Sir John LENON’s words: “You say I’m a dreamer. But I’m not the only one”. Obviously, if one day should arrive where dreamers would no longer feel alone, it will surely be today, in this XXI century that looks like no others (Social Innovation, World Economic forum 2016). Let us now link this Assumptions with the Financial trends. Mostly since the 2008 subprime crisis (The Big Short, 2015), people of the world are aware of global issues and have learnt through medias and internet to almost systematically bad-mouth behind the back of Financial Capital Markets - It’s not me who said it, it’s Charles FERGUSON in the documentary Inside Job (FERGUSON, 2010). The question is actually extremely complex due to the contemporary ultra-varied services provided by banks “Too big to fail”, hedges fund or various financial services companies which use complex mechanisms as securitization to create new financial products some time much better some time not. Nevertheless, some of us nowadays know that complex structural issues concerning Financial Institutions make the world face numerous obstacle when it’s about support social progress but much less when it’s about agglomerate capital in few pockets. By and large, we could summarize the situation with the following forecast graph, picked out from Thomas PIKKETY book “Capital of the XXI century”. You will see, it is especially relevant to get an overview of the capital behavior, which as we can see follows a trend of accumulation since its low point in 1950 and could keep going higher. And When we cross this context of societal frustration resulting from the high concentrated capitals, with the digital disruption’s one, we actually highlight the key concern we trying to cover with this work: A Financial Disruptive Revolution is coming and FinTech are initiators of this revolution; Do Banks are prepared enough? Is France ready? (from PIKETTY, 2013)
  17. 17. 2030 French FinTech Scenarios 16 SID 1519049 This is the current situation; we face a society which is influenced by a disruptive social-tech revolution which once implemented could deeply transform mechanisms many century-old. Meanwhile, Progress faces difficulties and obstacles ironically brought out by this connected revolution which because disruptive, makes some people sick. Concerning precisely technologies, although they grow and fit an exponentially larger part of our industry, our economy and our life, it either start to threat former patterns which many depend thus bringing out some questions:  To what extent a disruptive revolution could be achieved within a potential negative opinion?  How it could affect our industries first, then our Economy and finally our Life? The first finding is the growth of a young generation surrounded by technologies since birth. These new adults born in a connected environment are going to be most adept to apply new high tech processes to traditional businesses, more than each others could have done before. This environment influence then since first stages of personal development through connected technologies, Screen and Video games. According to “The Google Method” by Jeff JARVIS, it also makes them more open- minded or for the least more aware of the rest of the world (HarperCollins Publishers 2009). They know how technologies works better than ever, they have used to spend many time on the World Wide Web since their youngest age, and they are generally more efficient, more self-managed, and more autonomic. They should as well accept easier disruptive features involved in technologies they know. This generation therefore fit a potential huge market for financial technologies companies (FinTech). Such context could be interpreted as a royal pathway for FinTech companies to develop their activities. Through a logical forecast process, we therefore could imagine that FinTech breakthrough is inevitable, aren’t we? Unfortunately for Financial Technologies Companies, it’s not as simple as that. The Point is the following; we are studding France. France is a country where history, politic values and traditional principles fit a large place within the common moral concepts (Thomas PIKKETY, 2013) and especially when it’s about money, wealth or even trade (We are voluntarily generalizing). The abolition of nobility’s privileges two centuries ago has ink the country in a suspicion climate concerning high capitals, especially among the left-most fringes of the population, political ancestor of current socialists and radical labor parties. In addition to two traumatic Word War, French society guided by “Providence State” throughout the glorious Thirty have basically become definitely more social focusing and by French extension; suspicious toward high capitals or incomes. Actually, a large part of French public opinion is rather conservative and still traditionally opposed to liberal legislations (Nuit Debout, 2016). A wired when we to surf the disruptive waves of a cataclysmic Third Industrial Revolution (Jeremy RIFKIN, 2013). French traditional financial companies are especially concerned by these changes because truly bigger than other-ones, critically sensible and especially able to implement disruptive technologies in their business patterns (Jeffery D. Sachs, 2016). On top of that, they have to face the possibility to be in competition with new financial technologies companies (FinTech). Those which provide services of the same nature, but with lower prices, lower restrictions and which in case of success could be a sustainable banks’ replacement. FinTech’s are today on the first step of a long path toward a higher penetration in the markets. In a society cleaved between always more disruptive ideas brought up by
  18. 18. 2030 French FinTech Scenarios 17 SID 1519049 Reluctant to transit toward financial technologies companies Likely to transit toward tinancial technologies compagnies young generation and traditional values supported by former generations, only time should answer to the next question: Is French society ready to disrupt their former economy to transit in a new one that most have trouble to imagine? Because nobody can actually forecast precisely to what extent French public opinion could change and toward what direction, this work has consequently to postpone advises and strategic conclusions for both following potential situations by 2030 horizon:  An overall French society likely to adopt disruptive financial services provided by FinTech instead of traditional banks.  An overall French society reluctant to adopt disruptive financial services provided by FinTech instead of traditional banks. This divergence in potential future just highlight our first Driver, critically relevant concerning our scenarios building (Shell, 1993) and influencing horizon both opposed way. Driver 1: Aptitude of French consumers to transit toward disruptive technologies companies concerning their wealth management, loans demands and payments. Drivers are vectors with two directions, both strictly opposed (ETUI, 2014). These two directions embody two future possibilities. We have above the first Driver, which shape the first dimension of our scenario map. Nevertheless, now we need to find out the second dimension of this scenario map in order to make them even more appropriate to answer our research question. The first Drivers give us an analytic framework related to the FinTech’s growth capacity, which is only one part of the question. The second part of the question is the potential impact of this growth upon the French Personal Financial Services Sector. According to PESTEL analysis suggested to find out Scenarios’ Drivers, FinTech is a new threat in the banks surrounding. Like Transfer Wise which reduce the fees for foreign transactions, Lending Club which provide peer-to-peer lends or Yomoni which provides personalized financial advises according to your strategy and your risk profile, many start-ups are currently emerging with structural improvements and simplifications allowing them to be more dynamic, efficient and resilient to waves of digital innovations. To the opposite, Banks face a new challenge and have to schedule new strategies to implement disruptive technologies within its organizational structure, in order to avoid being putted away and viewed as old and reluctant to new connected economy. Driver 1
  19. 19. 2030 French FinTech Scenarios 18 SID 1519049 Weakly equipped to cope with next wages of digital innovations Highly equipped to cope with next wages of digital innovations To improve their organizational structure and remain technologically updated, the Report of the London FinTech Innovation Lab (Accenture, 2015) suggests few key directions strategies should undergo. We highlighted these key directions in the following illustration: This scheme suggests the hypothetical best pathway for bank to cope with next waves of digital innovation. However, a question remains central: Either Banks will implement such strategies soon enough and quick enough and lead a Personal financial digital revolution, either it may be the contrary and FinTech too much flexible for institutional banks will snack Financial Services sector’s market shares and cut the grass under banks’ feet. We consequently face the second divergence concerning the potential futures of institutional banks patterns:  Reimagine structural organization soon and quick enough to finally being highly equipped to cope with next waves of digital innovations  De not be able to reimagine it at time and being weakly equipped to cope with next waves of digital innovations This divergence therefore allows us to finally shape the second dimension of our scenario map through the following driver: Driver 2: How equipped do banks are to cope with next wages of digital innovations Driver 2 Collaborate Act Open Invest
  20. 20. 2030 French FinTech Scenarios 19 SID 1519049 A1 B1 B2 A2 A1 A2 B1 B2 Driver 2 Concerning French tradtional Financial compagnies Driver 1 Concerning Individual wealth management and needs Scenarios Building Scenario Map From these two main drivers, we are now able to expose our scenario map. This orthonormal frame allows us to make our scenarios clearly obvious and logically shaped. Indeed, guided by direction of Drivers, these scenarios will embody together a global hypothetical projection of what the future Horizon could be. Digital Banks Big vs Small Living in the past Decline of Banks
  21. 21. 2030 French FinTech Scenarios 20 SID 1519049 “Digital Banks by 2030” This scenario is based on the following hypothesis:  French population rather reluctant to assign their incomes into Start-up using disruptive financial technologies will remain away from young FinTech and prefer to trust traditional Banks to manage their wealth.  French Banking sector, aware of the disruptive side of new financial technologies concerning their viability, will quickly go ahead and implement quick enough what needs to be implemented to cope with such context. Into this development, we therefore go to find out how banks could shift their classic patterns trough new structural and organizational improvements in order to cope efficiently with disruptive waves of innovation in Financial Technologies. Furthermore, FinTech being one which embodies these disruptive waves, we also will find out why those last could turn out being inappropriate to reach the French Market. Why Traditional French Banks could become Digital by 2030? 2016 – 2018 The average worldwide investments in FinTech has tripled since 2012 and its curve could well follow an exponential path throughout these next decades following other investments in disruptive technologies as the Internet of Thing and the 3D printing. The 3rd of May 2016, France FinTech organize the largest French event related to FinTech outlooks to define what the future holds for all stakeholders. Heavy politicians and Personalities are part of this like Emmanuel MACRON (French Minister of Economy), Nick LEEDER (Director of Google FR), Laurent SOLLY (Director at Facebook FR), François VILLEROY de GALHAU (Governor of Banque de France) or even the ex-COO of Lending Club John DONOVAN. This conference’s outputs have turned out relevant for Banks and French Government which picked out main improvement to implement in order to catch the FinTech Wave, as well legally (make the law more flexible meanwhile strengthen AMF regulation power) than structurally (Make Banks easier to restructure and encourage partnership with start-up) and economically (Transit toward a consumer-focusing strategy, reduce additional costs by fulfilling an open-strategy concerning information share). 2018 – 2020 ADVIZE, a financial advisor start-up which provide a flexible portfolio management service, has been taken over by BNP PARIBAS (member of the R3CEV block-chain consortium since November 2015) which follow a Digital strategic plan. Crédit Agricole follows the initiative and take over YOMONI which is the main French competitor in digital Financial advice. Crédit Agricole already had a range of mobile solution for its customers and by integrating YOMONI become one of the more customer-focusing French bank with BNP. Meanwhile, major banks also are in a Frenzy of partnerships and each of us now have a complete set of mobile application making people able to bank without going to physical office. This dematerialization make banks globally need to downsize and cut costs removing unproductive departments (physical offices, personal advisers) to keep investing in sustainable
  22. 22. 2030 French FinTech Scenarios 21 SID 1519049 restructuration. Following the BNP’s example which in 2016 had deleted 675 jobs, 5 of the biggest French banks therefore release important redundancy plans. 2020 – 2025 R3CEV consortium now brings together the major part of traditional French banks in collaboration with several International banks. In 2020, R3CEV announce the first implementation of a global inter- bank collaboration ecosystem based on the Block Chain Technologies. Through a partnership with Microsoft and its Azure cloud whose possibilities are endless, R3CEV allow members to transfer money, share information and create contracts with historically reduced costs and safe framework protected against fraud. Furthermore, Block Chain ecosystem make French banks able to create smart contract (self-executing documents) more suitable to individuals’ needs, speed up business transactions and using powerful algorithms, keeping ledgers synced. Thus complex environments like banks and financial companies are simpler to analyze and better to manage whereas costs are substantially cut. Next years, French FinTech Start-ups specialized in mobile payment explode and enforce to compete with Apple, Google and Samsung’s payment solutions. Indeed, Block chain ecosystem combined with Big Data have created a huge opportunity for start-up to develop smart payment applications and allow people to pay directly with their phone or their smart-watch with almost no additional fees. To illustrate, 40% of payment are smartly payed by 2022 and 60% by 2024. Nevertheless, 75% of mobile transaction are still performed trough the famous IT companies’ wallet apps and local FinTech has barely progressed. Detecting in this business a potential threat to their payment incomes’ sources, French banks now more horizontally structured and thus agiler to change, have taken over between 2022 and 2025 many Payment FinTech like MangoPay or SlimPay in order to stay competitive with biggest High-Technologies companies. Therefore, in 2025 French banks are fully equipped and thanks their FinTech partners are able to propose a qualitative offer to French population, enough strengthened and customer-focusing to become highly competitive. 2025 – 2030 In 2025, only 20% of the French population keep going into banks’ offices to manage their account and adapt their services to their profile. The total weight of the classic Banking Sector into total employment decrease from 15% in 2016 to 5% in 2025. Meanwhile, the Credit high demand trends begun in 2017 has been confirmed and French individuals’ demand for loans is staidly raising. Especially in a decade of major transitions, many entrepreneurs want to fund their projects and 10% of missing former banks’ employees have made inflated this entrepreneurial global behavior principally by creating Start-up as well numerous as specialized. This need to fund a huge economic, social and energetic revolution is satisfied by two major means; Digital Banks’ loans on a side and FinTech solution on the other side (Peer-to-peer lending, crowdfunding, small Business private equity markets), embodied on the major part by international FinTech (Kick Starter, KissKissBankBank, …). This bipolar situation quiet profitable for businesses because diversified, actually become rather dangerous for French economy. Banks which hold the major part of French savings and pensions face in this second decade’s half face few difficulties to keep strong assets because a fierce competition with foreign FinTech in credit allocation. To regulate this situation and guarantee pensions and savings to the population, French Government have decided in 2026 to encourage FinTech Start-up and banks to bring them together within 5 French Financial Hub implemented in biggest French town. Every
  23. 23. 2030 French FinTech Scenarios 22 SID 1519049 FinTech which reach a Hub will be financially helped and could work among a wealthy dynamic environment. These Hubs of financial activities then allow actors (Big Digital Banks and Small Innovative Start-up) to collaborate efficiently in order to enhance their capacity to create attractive smart and flexible products to satisfy the loans demand steadily raising. In 2029, Financial Hubs regroup more than 150 companies, supply 75% of the French credit demand and relaunch the employment in the sector reaching 10% in 2029. Finally, in 2030 the Government inject 5 Billion in Financial Hubs and announce the next main economic plan of the France History: Lead a French Sustainable and Collaborative Economy by 2050 ________________________________________
  24. 24. 2030 French FinTech Scenarios 23 SID 1519049 Big Vs Small by 2030” This scenario is based on the following hypothesis:  French population rather likely to transit toward new financial technologies to manage their wealth have begun to join young FinTech start-up and progressively leave traditional Banks to change the way they bank as soon as they could.  French Banking sector aware that many customers already leave them for FinTech, quickly go ahead and begin to improve their structure in order to remain competitive with new small. Into this second development, we are going to evidence a context of high competition between classic traditional Banks and new FinTech Start-up which quickly turned out being an important threat for former Banking sector’s sustainability. Trying to imagine how such a situation could happen and how French financial stakeholders should cope with it to remain competitive. When former Big become threaten by new Small 2016 – 2018 2017 was a key year concerning FinTech development in France. In the first hand, TransferWize (a FinTech Start-up which allow people to send money to each other and especially aboard with residual costs), has known a 120% growth principally supported by a high-communication in social Network since 2015 aided by a total funding of 91M$ from its unveiling in 2011. Thanks this powerful peer-to- peer money transfer service, the company cover in 2018 45% of French market shares concerning money transaction usually handled by traditional Banks which saw their incomes consequently decrease. Meanwhile, Yomoni and Advize which provide flexible and customizable savings solutions have both steadily grown and now reach 8% of French total savings (mainly through middle classes). Finally, the Peer-to-peer credit trends has been strengthened and FinTech specialized in Crowdfunding, Peer-to-peer lending and Equity Crowdfunding has been used trough 30% of French financial needs. 2018 – 2020 French Banks has realized a certain vulnerability through the increasing demand for FinTech in peer- to-peer lending and transfer. Therefore, they have begun since the end of 2017 to restructure their activities. Indeed, BNP, LCL and other major traditional banks have taken together the opportunity from R3CEV to strengthen their set of mobile application transferring a large part of their financial activities toward digital platforms to encourage people using FinTech solutions to transit toward their new tools. On the opposite, France assist to the emergence of Financial Technologic Pole bringing together FinTech start-ups within two specialized hubs: The Crowdfunding French Hub implanted in Nantes gather Ulule (The first European Crowdfunding company), Seedrs (an equity crowdfunding), Mymajorcompany (a French participative funding company) and 6 other crowdfunding FinTech specialized respectively in ecological funding, social funding, innovation funding, TPE/PME funding, Individuals micro-funding and even one political funding. Furthermore, a Technologic Financial Advice Hub has been implanted close to Paris La Défense bringing together FinTech Start-Up specialized in Robot-advisors and individuals’ portfolio management (Yomoni, Advize, …). Letting Traditional Banks
  25. 25. 2030 French FinTech Scenarios 24 SID 1519049 aside, these Hubs promote the end of a Banking Sector too big to fail, the diversification and the specialization of financial services companies. 2020 – 2025 Both crowdfunding Hub and Technologic Financial Advice Hub surprise the French economy draining in 2023 more than 35% of global French banking activities thus employing 5% of the total French payroll. Meanwhile, traditional banks did not have choice and between 2017 and 2025 cut the major part of their physical activities reducing the classic banking payroll from 15% in 2016 to 3% in 2025. Forced to specialize to remain competitive against new FinTech Hubs, they have reorganized their activities, downsized and take over a couple of start-ups which would accept to join them. To better frame the situation, even Public funds handled by the Government are now entrusted up to 40% to the Technologic Financial Advice Hub while 60% are held by traditional banks. In order to keep its market shares and avoid a serious collapse, Traditional smaller banks progressively join FinTech Hubs which ink the possibility to make them entire part of the new FinTech ecosystem. In counterpart, they have accepted to reduce their action scope, decentralized their head office and accept to be under the tutelage of a Hub where each company works with other ones, not against. Otherwise, bigger ones like BNP or Société Générale which has developed digital activities strong enough to remain competitive, shift toward new strategy by proposing a global digital ecosystem making credit, savings advice, money management and payment unified within one platform per bank. Société Générale thus make available its platform “MFDW” (My Financial Digital World) come to compete with other banks’ unify packages which globally reach 30% of the French population; mainly those who were seeking for a simple unified platform bringing together all what they need to bank in a single application. 2025 – 2030 Throughout the second half of the decade, the French Global Banking sector is relatively stable and a clear trend is taking shape for the long term. Indeed, to achieve an energetic transition and transit toward and collaborative economic revolution involving industries like 3D printing or even global electric smart grid’s construction, plenty entrepreneur starts their own business. In 2025, 10% of superior graduated decide to develop their own start-up, and consequently need funds to start the activities. Official figures are deeply clear; 75% of young businesses chose FinTech funding solution to support their projects. According to them, more diversified, Crowdfunding FinTech make available to entrepreneur financial products more flexible, suitable to their size and more relevant because internationally open. Another heavy trend suggests older Businesses which reached a substantial and sustainable market, are likelier to set up their activities through a unify platform, easier to manage in order to increase business efficiency. This trend actually illustrates the cession between big former Bank which achieve their digital transformation, and smaller companies which enforce to make finance easier and more accessible to any initiator. In other words, it highlights the main differences between markets reached by both FinTech companies and Banks; Young companies seeking for development and risk are likelier to request FinTech services (more diversified, more specialized) whereas older companies rather seeking durability and security are likelier to request a classic unify application from classic Bank, making finance management easier and safer. In this Big Vs Small scenario, banks therefore remain the dominant long term financial services provider, although FinTech companies brought together in FinTech Hubs became the financial incubator for start-up and a catalyzer for progress.
  26. 26. 2030 French FinTech Scenarios 25 SID 1519049 Decline of Banks by 2030” This scenario is based on the following hypothesis:  French population is rather likely to transit toward new technologies concerning their wealth management. The general opinion is suspicious about banking sector and new disruptive solutions appears as a means to make finance fairer.  Major Banks are late and didn’t took decisions soon enough to cope with new disruptive financial technologies making them weaker. This scenario is going to improve our ability to manage financial mutation’s context from former too big to fail Banks toward New Disruptive FinTech companies. It will evidence the way our economy could be impacted in the situation of a massive transition and thus make us able to be prepared to cope with such eventuality. Voluntarily underlined, the attractiveness of FinTech solutions are here considered at their maximum potential and should be analyzed accordingly. In a fast growing society of low marginal cost, being big is not so well 2016 – 2018 The 3rd of May 2016, The event “FinTech R:EVOLUTION” organized by France Fintech brought out dozens of French FinTech, those qualified of “The bests French FinTech” among which Yomoni and Advize (both FinTech leader of French Personal wealth management), Leetchi and Ulule (deemed among crowdfunding European FinTech) and many others from Payment solutions, to peer to peer lending and even personal Trading ones. This conference has allowed jewels of French FinTech’s to know more about the current state of development of their competitors but has also made them more conscientious about the general long term potential of the disruptive revolution they all embody. The idea according to what they should bring themselves together within Financial Technologic Hub has been put on the table and first plans to elaborate such a collaboration began to be scheduled in order to reach it by 2025. 2018 – 2020 FinTech growth rates are staggering and in 2019 FinTech industry globally grew on average by 15% each year since 2016 with a 26% growth just in this 2020 year. People who by the past where rather suspicious concerning FinTech companies have yet well assimilated the opportunity they actually face through those new players. Thanks to a great communication from France FinTech upon them and an accurate synchronization in their own communication campaign, French FinTech companies have reach their goal and perfectly shared the excitement about this new smart way to bank with the French population. In a study published by the end of 2020 by the INSEE, three French citizens on five have related having consulted a digital FinTech in order to cover a financial need, 40% declare having already transfer partially or fully their funds through FinTech personal robot advisors, 55% confess being interested by crowdfunding to fund their personal projects, 72% usually use Electronic wallet (for the most using Bitcoins) to pay without fees and 66% has related a willingness to leave their traditional bank over the next five years. Meanwhile, Banks afraid by this huge reversal of situation have tried to catch the digital trend the most quickly they could. They however have faced a range of issues caused by a complex historic structure full of toxic clauses making processes slower. Certain
  27. 27. 2030 French FinTech Scenarios 26 SID 1519049 have tried to take over FinTech in the hope of taking profit from their experience but just few start- ups accepted whereas the major part, already in the scope to collaborate in future FinTech Hubs, had politely declined the offer. 2020 – 2025 FinTech keep going toward the idea to group their activities within Financial Technology Hubs by 2025. Those enough developed have already begun to implant their activities in strategic places near the most dynamic French towns. In 2022, bargains between BNP Parisbas and Yomoni which was a hope for the traditional commercial bank to catch the individual wealth management trend and recover its past health, has failed and no agreement was found. The following week, the BNP stock fall by 18%. Resulting in its fall the global trust in institutional banks, 2022 is the year which rush the Banking exodus. To prevent against serious economic collapses potentially dangerous for French economy and French Retirement Pension, Government didn’t find alternative that’s hedge his back by transferring property and funds toward more trustfully and durable entities. Therefore, an emergency plan called “Transit Toward a Smart Bank; Now or never”. Between 2023 and 2025 government thus injected 15 Billion in the achievement of National Financial Technology Hubs distributed near each of the following town: Paris, Bordeaux, Nantes, Lyon, Marseille, Clermont-Ferrand and Lilles. Bringing together French FinTech as well as international ones, France has thus laid the foundations for a sustainable long term FinTech industry, horizontally structured, led by decentralized decision more suitable to local needs and each year welcoming New Start-Up which technologically enhance our financial efficiency. 2025 – 2030 Yet a major Issue remain on the table after this Banking revolution; what will weaker traditional bank become? In order to help them and save what could be saved, Government encourage those still standing to join FinTech Hub and accept a total restructuration of their former patterns to aid French FT-Hubs to lead a collaborative economy revolution bringing on the table their historical experience. Those which declined were rather rare if not non-existent. In 2028, French Financial Technology Hubs employ 10% of the total active population (still less than 15% that Banks employed by the past but the figure is growing each year with Start-ups joining Hubs). The same year, FBF’s Key Figures revealed positive indicators concerning the French Economy; In 2028, loans to Economy have grown by 15% (Loans to Individuals by 11%, to SME/TPE by 22% and loans to companies by 12%). On top of that French savings has been fruited by 6% into Wealth Management FinTech (Robot advisors and Private Analysts) thus shifting toward an inflation economy suitable to a goal of high Green Growth. In 2030, France is elected second country the most innovative of the world in the “Top 100 global innovator” published by Thomson Reuters. This status comes mainly from the fact that French Start-up have internationally shown an incredible determination to achieve technologic improvement necessary to globally reduce inequalities and spread those technologies the more they could. The influence of French Start-ups is catalyzed by a smart financial ecosystem, using Big Data to locate ideas the more sustainable and fund them, underlying the initiative improving the civic sector and thanks ultra- diversified FinTech activities able to satisfy needs of thousands of job corps collaborating in specialized communities. Even if its GDP Growth is yet lower than in powerful economies like China Japan or United Stated, France’s percentage of Green and Social Growth is more than 40% what means that, like it was for human rights last centuries, France again spread equality values around the entire world.
  28. 28. 2030 French FinTech Scenarios 27 SID 1519049 “Living in the past by 2030” This scenario is based on the following hypothesis:  French population is mostly reluctant to transit toward Disruptive financial technologies concerning their wealth management, their need to loans or the way they pay. Individuals’ education concerning money is quiet weak and French prefer let the Bank assume risks and perform operations.  Despite the fact they keep their market shares safe, traditional banks don’t give as much importance to FinTech improvements and keep going on their traditional strategy remaining fees stable and collaborating the bare minimum with start-up providing new way to bank. This last scenario may turn out being the worth for the French economy. It embodies the possibility that France remain in its conservative mindset thus making the country’s economy weaker against foreign FinTech initiatives supported by exponential investments and deep reforms. Through this Hypothetical future, we obviously want to expose the worth direction that France could follow, the one which could definitely ink the historic powerful economy into a deep aging and progressively relay it far behind his European neighborhoods. Do not respond is tantamount to letting die 2016 – 2018 Throughout 2017, Presidential Campaigns have shaken the public opinion and few candidates have spread nationalist ideas invoking a necessity to protect the country against globalization and free trade. The 15th of May 2017, the Nationalist party “Front National” has been democratically chosen by French. Upon the Bank and financial questions, their politic program is clear; Protect French Banks against eventual competition by ultra-strengthen financial regulations, restrict trading operations considered too risky, implement banking data protection policies and prevent most foreign investment in French industries. The following 2018 year, 73% of requests from FinTech start-up to be legally recognized has financial services provider has been declined by AMF thus slowing down the French FinTech development. At the same time, banks too busy implementing new legislations through their complex structure don’t pay attention to the necessity to reorganize their activities faced with the threat of International Financial Technologies companies. 2018 – 2020 In the absence of possibility to implement technologic tools as foreign banks already did, supported by FinTech start-ups (partnerships and mergers and acquisitions), major traditional French banks concentrate its effort to enhance their digital platforms in order to ensure French digital demand is satisfied. French population is still suspicious about alternative financial services companies as well as mobile wallets or peer-to-peer loans. Keep going to bank through traditional unified banking apps, they stay away from Financial Technologies’ start-ups and thus create a general hostile context for their development. Meanwhile, neighboring investments into FinTech industry has reach an historic level and the FinTech industry is even designed by most business review as the market with growth opportunities the important. To respond to this increased willingness to control the French economy inside border and protect the country against an open world, an important wave of protestation
  29. 29. 2030 French FinTech Scenarios 28 SID 1519049 supported by Most of Young generations has emerge from every French major town. In 2020, to celebrate the second decade of the XXI century in their own way, a collective of Hackers supported by the international movement Anonymous has achieve the bigger hack of the French History. Five Tera- octets of confidential banking information has been release publically in only one Week containing 40 Million French’s banking information. 2020 – 2025 After The 2020 Banking Information’s Hack, French Banks had to react the most quickly they could to protect its consumer’s savings, avoid fraud and increase the security level of their confidential information to keep away new hacking threats. The whole restructuration in order to achieve such improvement has cost them a lot of money and a lot of time. Foreign countries having already implemented the Block-Chain technology within their structure are mostly protected against such Hack and France therefore seems like distraught what cause a global French banks’ stocks 10% falling down. Of course the government remains positive and announce that French Banks are now stronger against informatics attacks, what French citizens mostly believe and consequently remain faithful to their bank. Although the 2020’s Hack has created some breaches in French Banks firewall, it also initiates something still more interesting; The Years which follows the Hack, French citizen has received a tone of advertising E-Mail proposing them various banking services provided by foreign Financial Technologies’ companies. Indeed, Foreign FinTech already well developed have jumped at the chance and most have even created teams with sole purpose to use data released in 2020 and reach the more French citizens they could. In 2025, 20% of the French population perceiving fragilities in French traditional Banks have therefore transited toward Foreign FinTech principally for their savings management and payment means. 2025 – 2030 Finally understanding the necessity to open data relatives to French Banking habits to support new French Financial technologies initiatives, the government decide in 2026 to authorize the AMF to release banking information to Private FinTech companies with the hope to boost the French Fintech still insignificant compare with its European neighbors. The Consequence was radical and did not come from where expected. Only in 2027, one year after the legislations was implemented, French percentage of the population using FinTech climbed from 20% to 55%. This result could appear rather optimistic for French economy, but actually the Part of the French FinTech among every FinTech reaching French citizens is only 15%. Bad News for the French Stocks Index, which loose its biggest players and don’t bail out with new FinTech entrants. In 2028, AXA SA stocks has totally fell from 20,31 in February 2016 to 13,6 in February 2028, CIC’s stock from 173,05 to 120,13, Natixis from 4,87 to 2,95, BNP from 42,45 top 32,62, Crédit Agricole from 9,43 to 6,58 and Société Générale from 32,02 to 21,18. Because French FinTech didn’t reach a sufficient market to become heavy enough to support the French economy and reach the 40 highest French Market Capitalizations (CAC 40), the French Index dramatically fall from 4500 in 2016 to 3340 in 2028 initiating a structural low trust-trend concerning the French economy around the world. In 2030, three traditional Banks on five have gone bankrupt. French GDP is relay from the 6th position in global ranking to the 10 behind India, Canada, South Korea and Brazil. French population no longer hoping a revival of the Former Historic Power progressively leave, emigrate toward more dynamic country. Basically, in 2030 France is living in the past.
  30. 30. 2030 French FinTech Scenarios 29 SID 1519049 Conclusion and recommendations Conclusion These scenarios have evidenced four main directions that France could undergo concerning the way its banking environment (Banks and FinTech) will become by 2030. The most probable ones are the “Big vs Small” and “Digital Banks” scenarios. The first one keeps our both actors safe and implement a high competition context within the French financial sector, rather profitable to both industries banks and FinTech and consequently more likely to be follow by the French Institutions. The second one is also rather probable. Indeed, because the French specificity to be generally reluctant concerning technologies which disrupt its current social-focused system, Banks which have interest to digitalize their activities has a large room for maneuver and are less pressurized. If those scenarios are rather more credible because following the idea according to what Banks will be equipped soon enough to cope with next waves of digital disruptions, both others could well turn out preciously useful in the case of a major event would come to change the current context. Whether it is the election of a nationalist candidate to the precedence, a vindictive initiative from FinTech to walk away from Banks and properly disrupt them or even a social revolution slowing down the entire process, those situations still have a substantial probability to happen and will there be critically useful when it’s about cope with the most unexpected. This Scenario planning should therefore remain useful for yet a few years. Recommendations 1. Banks should collaborate more with Start-up, thus creating a trustfully partnership ecosystem profitable for both banks and FinTech. 2. Banks should increase investments in High Technologies especially in Block Chain which will radically improve many former mechanisms. 3. The R3CEV consortium should be the main leader of the Block Chain spreading through most World Wide banks. BNP shouldn’t be the only French bank being part of that. 4. Yomoni and Advize are now big enough to promote their activities and could well become highly attractive after a few year of positive results. Banks should take a peek for an eventual acquisition. 5. FinTech Start-up should join the France FinTech group to become member of a dynamic specialized community where members think the future together. 6. Each French Bank should quickly implement a unify electronic application for their consumers. It’s imperative and will make further technologic implementations easier to release.
  31. 31. 2030 French FinTech Scenarios 30 SID 1519049 7. If a nationalist party win next elections, Banks have to quickly partnership with technologic companies even if those last are not FinTech. Everything shall be done to remain open on the rest of the world, and only communication technologies could do that when legislation doesn’t. 8. FinTech should implement their activities in dynamic geographic poles in order to remain surrounded by various financial companies as well start-ups as Banks. 9. Banks shouldn’t be left aside by FinTech; it could seriously affect the economy on the long term. FinTech has also to collaborate with big institution in order to act responsibly and safely transit toward a new economy. 10. Banks should follow an important restructuration plan, cut posts and specialized their activites if they want to protect their assets against next disruptive waves. 11. FinTech should collaborate with others and create Strategic agglomerates to better organize their activities and promote together a new way to bank. Then such conglomerate could well become the Financial Technologic Hubs of our scenarios. 12. Collaborate, collaborate and still collaborate. Don’t forget the long term target: A collaborative economy. ________________________________________
  32. 32. 2030 French FinTech Scenarios 31 SID 1519049 Endnote I hope This work will help French traditional financial companies or FinTech Start-ups to cope efficiently with the next future. Something huge is happening, whether in Finance that in every component of our current society. Oil prices are crashing down, Green energies are developed more quickly than ever, Space X rocket has successfully landed on Earth after being in space, AI has beaten human in GO which is the game the most complex we ever created, we are 3D printing glass, steal and cement and even MIT lectures are now available on YouTube. All that to says that obviously, we are really leaving a historic transition from former individualistic patterns supported by IP and individual success toward new collaborative ones whose values are Transparency, Sustainability and Open sourced information. I wish I could support this transition which is full of hope for many people around the world and I intend to be part of it along my life. Finally, If I should give a last advice, it would be for French society, especially to all these young people which are fiercely protesting outside: Let’s be proud of our past, of our traditions, of our legacy and our history but please don’t let us be nostalgic of a world which doesn’t exist anymore. Let’s be proud of our freedom, proud to claim it, protect it and being its ambassadors, but do not use it to prevent a step towards the future, because it’s a step towards the future which formerly allowed this liberty. Stop be stationary, generally suspicious and sadly desperate. Instead let us be new, express our ideas and discuss about it around tables. Let us remember our power, we are France! A strong people’s culture, diversity and engagement. So no matter our backgrounds, let us rethink our way to collaborate, to interact and to share; Let us catch the future together, it’s time. Nicolas AUCONIE
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  35. 35. 2030 French FinTech Scenarios 34 SID 1519049 Movies Charles Ferguson, Inside Job (2010). http://www.imdb.com/title/tt1645089/ Adam McKay, The Big Short (2015). http://www.imdb.com/title/tt1596363/ MOOC Options, swaps, futures, MBSs, CDOs and other derivatives (Khan Academy), https://www.khanacademy.org/economics-finance-domain/core-finance/derivative- securities?ref=resume_learning#credit-default-swaps-tut. Stock basics (Khan Academy), https://www.khanacademy.org/economics-finance-domain/core- finance/stock-and-bonds?ref=resume_learning#valuation-and-investing. Publications Acccenture, Global Fintech investment growth continues in 2016 driven by Europe and Asia, Accenture study finds, Accenture (Apr. 13, 2016), https://newsroom.accenture.com/industries/banking/global-fintech-investment-growth-continues- in-2016-driven-by-europe-and-asia-accenture-study-finds.htm. BNP Paribas, BNP Paribas rejoint le consortium Blockchain de R3 (Nov. 24, 2015), http://www.bnpparibas.com/actualites/bnp-paribas-rejoint-consortium-blockchain-r3. Chanyaporn Chanjaroen and Grace Huang, Two Harvard Students Are Changing Lending in Southeast Asia, Apr. 6, 2016, http://www.bloomberg.com/news/articles/2016-04-06/harvard-student-s- chance-pitch-to-ceo-hits-home-in-fintech-race. Margaret Collins, What matters most to people in markets as they look ahead (Bloomberg.com Mar. 7, 2016), http://www.bloomberg.com/features/2016-march-what-to-watch-markets/. Jade Grandin de l’Eprevier, BNP Paribas Supprime 675 Postes Dans Sa Banque D’investissement, Apr. 15, 2016, http://www.lemonde.fr/economie/article/2016/04/14/bnp-paribas-supprimerait-environ- 675-postes-dans-sa-banque-d- investissement_4902310_3234.html?utm_content=buffer43aa8&utm_medium=social&utm_source =facebook.com&utm_campaign=buffer#mf_sid=1324397348. Laure-Eline Faure, [Infographie] que font les ménages français avec leur épargne ? (Mar. 6, 2016), https://www.yomoni.fr/blog/infographie-que-font-les-menages-fran%C3%A7ais-avec-leur- epargne?utm_source=Facebook&utm_medium=Post+sponsoris%C3%A9&utm_campaign=Post+Spo nsoris%C3%A9+Facebook. Finyear, Investissements dans les Fintech en Europe: La croissance la plus rapide (Finance, blockchain, digital | Journal quotidien Mar. 31, 2015), http://www.finyear.com/Investissements- dans-les-Fintech-en-Europe-la-croissance-la-plus-rapide_a32450.html. Investopedia, Moore’s Law (Investopedia 2003), http://www.investopedia.com/terms/m/mooreslaw.asp.
  36. 36. 2030 French FinTech Scenarios 35 SID 1519049 Joshua Gans, The other disruption, Disruptive innovation (Harvard Business Review Mar. 1, 2016), https://hbr.org/2016/03/the-other-disruption. Bala Iyer, To predict the trajectory of the Internet of things, look to the software industry, Technology (Harvard Business Review Feb. 25, 2016), https://hbr.org/2016/02/to-predict-the-trajectory-of-the- internet-of-things-look-to-the-software- industry?utm_campaign=HBR&utm_source=facebook&utm_medium=social. Peggy Johnson, Empowering the Financial Services Blockchain Revolution - Transform, Uncategorized, Apr. 4, 2016, http://blogs.microsoft.com/transform/2016/04/04/empowering-the- financial-services-blockchain- revolution/?utm_content=buffer335ed&utm_medium=social&utm_source=facebook.com&utm_ca mpaign=buffer#sm.00000iyg0jz3trfigpl4yjrw50t8s. Simon Johnson, The end of big banks, Business & Finance (Project Syndicate Feb. 29, 2016), https://www.project-syndicate.org/commentary/blockchain-technology-end-big-banks-by-simon- johnson-2016-02?barrier=true#ITFx2Dif1HjGYTBj.99. Nicolas Marchandise, Crowdlending: La France se dote d’un cadre plus équitable pour le financement des PME (FRANCE FINTECH Dec. 2, 2015), http://www.francefintech.org/articles/crowdlending. Simon Mathews, The Uberization of banking, Customer Experience (The Financial Brand Jun. 3, 2015), http://thefinancialbrand.com/52148/uber-financial-services-banking-disruption/. McKinsey, Disruptive technologies: Advances that will transform life, business, and the global economy (McKinsey & Company May 2013), http://www.mckinsey.com/business- functions/business-technology/our-insights/disruptive-technologies. Edward Robinson, Barclays, U.K. Regulators Endorse Bitcoin with Startup, Apr. 6, 2016, https://www.bloomberg.com/news/articles/2016-04-06/barclays-u-k-regulators-embrace-bitcoin-in- deal-with-startup. Jeffery D. Sachs, 5 things you need to know about fintech (World Economic Forum 2016), https://www.weforum.org/agenda/2016/04/5-things-you-need-to-know-about-fintech/. Jeffery D. Sachs, Could blockchain technology make big banks a thing of the past? (World Economic Forum 2016), https://www.weforum.org/agenda/2016/03/could-blockchain-technology-make-big- banks-a-thing-of-the- past?utm_content=buffer3277a&utm_medium=social&utm_source=facebook.com&utm_campaign =buffer. Jeffery D. Sachs, How to survive and thrive in the fintech revolution (World Economic Forum 2016), https://www.weforum.org/agenda/2016/01/how-to-survive-and-thrive-in-the-fintech-revolution/. Jeffery D. Sachs, What will the bank of the future look like? (World Economic Forum 2016), https://www.weforum.org/agenda/2016/02/what-will-the-bank-of-the-future-look- like?utm_content=buffer09c41&utm_medium=social&utm_source=facebook.com&utm_campaign= buffer. Wil Schroter, Why Crowdfunding Websites Work, Forbes, Feb. 4, 2014, http://www.forbes.com/sites/wilschroter/2014/02/04/why-crowdfunding-websites- work/#7582669c4848.
  37. 37. 2030 French FinTech Scenarios 36 SID 1519049 Kimberly Trimble Social, 5 disruptive technologies that are challenging the traditional (IBM Big Data & Analytics Hub Jul. 14, 2015), http://www.ibmbigdatahub.com/blog/5-disruptive-technologies-are- challenging-traditional-banking-model. Oliver Sparrow, Management Options, (Shell, 1993). http://www.shell-livewire.org/business- library/business-plans/why-you-need-a-business-plan/Scenario-planning/. The Financial Brand, Disruptive innovation in banking, Innovation Strategies (The Financial Brand Jun. 25, 2014), http://thefinancialbrand.com/40693/disruptive-innovation-banking-introduction/. Angela Wilkinson and Roland Kupers, Living in the futures, Managing uncertainty (Harvard Business Review May 1, 2013), https://hbr.org/2013/05/living-in-the-futures. ________________________________________
  38. 38. 2030 French FinTech Scenarios 37 SID 1519049 Ethics Application Form Section 1: RESEARCHER AND PROJECT DETAILS Researcher details: Name(s): Nicolas Pierre Robert AUCONIE Department: Faculty: Anglia Ruskin email address: Nicolas.auconi@student.anglia.ac.uk Status: Undergraduate yes Taught Postgraduate Postgraduate Research Staff If this is a student project: SID: 1519049 Course title: Business Administration Supervisor/tutor name Project details: Project title (not module title): How fintech could redefine the French economic landscape? Data collection start date: (note must be prospective) 19 February 2016 Expected project completion date: April 2016 Is the project externally funded? no Licence number (if applicable): CONFIRMATION STATEMENTS – please tick the box to confirm you understand these requirements The project has a direct benefit to society and/or improves knowledge and understanding. yes All researchers involved have completed relevant training in research ethics, and consulted the Code of Practice for Applying for Ethical Approval at Anglia Ruskin University. yes The risks participants, colleagues or the researchers may be exposed to have been considered and appropriate steps to reduce any risks identified taken (risk assessment(s) must be completed if applicable, available at: http://rm.anglia.ac.uk/extlogin.asp) or the equivalent for Associate Colleges. yes My research will comply with the Data Protection Act (1998) and/or data protection laws of the country I am carrying the research out in, as applicable. For further advice please refer to the Question Specific Advice for the Stage 1 Research Ethics Approval. yes Project summary (maximum 500 words): Please outline rationale for the research, the project aim, the research questions, research procedure and details of the participant population and how they will be recruited. World financial system change throughout new revolutions in communication technologies. Indeed, the emergence of internet suggest a more collaborative society where former institution become decentralised. Moreover, the Big Date phenomenon allow us to bank differently and make people able to shape a personalized more experience. Finally, news society’s outlooks suggest than finance could become more local, thus supporting local initiatives especially efficient in a decentralised society. Let us therefore analyse how fintech start-ups which combine finance with new technologies, could become new actors able to change finance outlooks in French society.
  39. 39. 2030 French FinTech Scenarios 38 SID 1519049 Is your research ONLY a desk-based or library-based study that requires no direct or indirect contact with human participants; and which also is likely to have no impact on the environment? Desk-based (or secondary) research involves the summary, collation and/or synthesis of existing research. For further information, see http://en.wikipedia.org/wiki/Secondary_research Yes/No If Yes, proceed to the Declaration in Section 5 and from there to the green channel. Section 2: RESEARCH ETHICS CHECKLIST - please answer YES or NO to ALL of the questions below. WILL YOUR RESEARCH STUDY? YES NO 1 Involve any external organisation for which separate research ethics clearance is required (e.g. NHS, Social Services, Ministry of Justice) For NHS research involving just staff that requires NHS R&D Management Approval only and Social Care research please check with your FREP Chair whether this will be regarded as equivalent to Anglia Ruskin University’s ethical approval. no 2 Involve individuals aged 16 years of age and over who lack capacity to consent and will therefore fall under the Mental Capacity Act (2005)? no 3 Collect, use or store any human tissue/DNA including but not limited to serum, plasma, organs, saliva, urine, hairs and nails? Contact matt.bristow@anglia.ac.uk no 4 Involve medical research with humans, including clinical trials? no 5 Administer drugs, placebos or other substances (e.g. food substances, vitamins) to human participants? no 6 Cause (or could cause) pain, physical or psychological harm or negative consequences to human participants? no 7 Involve the researchers and/or participants in the potential disclosure of any information relating to illegal activities; or observation/handling/storage of material which may be illegal? no 8 With respect to human participants or stakeholders, involve any deliberate deception, covert data collection or data collection without informed consent? no 9 Involve interventions with children and young people under 16 years of age? no 10 Relate to military sites, personnel, equipment, or the defence industry? no 11 Risk damage or disturbance to culturally, spiritually or historically significant artefacts or places, or human remains? no 12 Involve genetic modification, or use of genetically modified organisms above that of routine class one activities? Contact FST-Biologicalsafety.GMO@anglia.ac.uk (All class one activities must be described in Section 4). no 13 Contain elements you (or members of your team) are not trained to conduct? no 14 Potentially reveal incidental findings related to human participant health status? no 15 Present a risk of compromising the anonymity or confidentiality of personal, sensitive or confidential information provided by human participants and/or organisations? no
  40. 40. 2030 French FinTech Scenarios 39 SID 1519049 16 Involve colleagues, students, employees, business contacts or other individuals whose response may be influenced by your power or relationship with them? no 17 Require the co-operation of a gatekeeper for initial access to the human participants (e.g. pupils/students, self-help groups, nursing home residents, business, charity, museum, government department, international agency)? no 18 Offer financial or other incentives to human participants? no 19 Take place outside of the country in which your campus is located, in full or in part? no 20 Cause a negative impact on the environment (over and above that of normal daily activity)? no 21 Involve direct and/or indirect contact with human participants? no 22 Raise any other ethical concerns not covered in this checklist? no

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