Technological changes colliding with other macro-economic and behavioural shifts could bring a £106 billion boost to the UK’s financial services sector by 2030, according to analysis from PwC.

Of this estimated new business during the next 10 years, PwC estimated more than half will be driven by advances in insurance (£49.5 billion) and small to medium-sized enterprise (SME) lending (£4.1 billion) as firms operating in this area mobilise to meet changing consumer habits.

Emerging risks and new tech could drive disruption in commercial lines insurance equivalent to a quarter of current revenues, leading to an estimated market uplift of £27.6 billion by 2030.

Disruption opportunities in the life and pensions sector could also benefit the market by £15.7 billion.

Almost a quarter (24 per cent) of the personal insurance market could be disrupted by 2030 due to the changing nature of risk and better data, resulting in a £6.6 billion boost, according to PwC, as new entrants capitalise on the demand for more customer-centric and digitally enabled services.

Examples include apps supported by artificial intelligence-driven digital assistants, allowing customers to buy and manage their home and rental insurance policies with minimal effort.

Globally, SME’s financial needs are increasingly being met by new players such as the internet giants, the report stated.

In the UK, big tech or smaller digital challengers could dominate the currently underserved micro-SME lending sector, due to the better information they possess and the improved user experience they can offer – this could kickstart commerce worth an extra £4.1 billion (37 per cent) of today’s SME market.

PwC suggested that as consumer habits evolve rapidly alongside major advances in technology, industry giants, which still hold the customer share advantage, will vie with startups and major tech firms for the new business.

Shazia Azim, head of strategy and financial services chief operating officer at PwC, said that FinTech presents a “fantastic opportunity” for financial services businesses to harness technological disruption and help shape the future of the industry.

“Crucially it helps level the playing field for those startups and scale ups using and developing cutting edge technologies – as a result, these newer players will be better equipped to battle for market share with the larger firms still adapting to the rapid pace of change.”

First mover advantage often belongs to the big tech players or startups, the report stated. However, these groups do not have a monopoly on the creative mindset, responsive business models and transformational approach needed for operating in a disrupted landscape.

Andrew Kail, head of financial services and a partner at PwC, commented: “We’re only seeing the beginning of the disruptive change that will change the face of every sub-sector, from insurance to asset and wealth management and from transactions to pensions.

“Consumers and businesses using innovative products want more tailored, more efficient and more secure technology. In order to meet this demand we may also see more joint ventures between the behemoths and the new entrants to combine forces around market share and new product.”

Share Story: