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What Will be the Long-term Outcome of FinTech’s Challenge to the Finance Industry?

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Editor’s Remarks:
With the world’s biggest FinTech conference taking place in London this week (the Innovate Finance Global Summit) we asked our readers what they think about the long-term impact that the rapidly growing financial technology sector will have on the traditional banking and finance industry. The idea that one side would come out on top of the other was not particularly popular. 19% of our readers thought that incumbent banks are likely to ward off any serious challenges, perhaps struck by recent trends in some parts of the finance sector, where the rapid growth of FinTech disruptors has prompted big banks to take extra measures to grow their R&D budgets, and even lay off personnel in areas like asset management where more sophisticated software is reducing the need for human involvement. 21% thought that some disruptors will replace incumbents, perhaps more impressed by unicorns like TransferWise and Blockchain (the bitcoin wallet provider) who seem to be taking over specific services. The most popular prediction was that old and new will end up collaborating, with 60% favourable to the idea. This certainly seems to be supported by how many FinTech success stories seem to come from doing specific services well, which could be integrated into traditional banks’ bigger client bases and capital cushions. What’s happening now, though, highlights how the line between collaboration and domination can be blurred: a new survey by Simmons and Simmons suggests that almost a third of banks and asset managers plan to buy a FinTech firm in the next 18 months.

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How Are the Chinese Net Giants Faring?

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In the last year, China’s tech giants have really come into their own. Finally, Baidu, Alibaba and Tencent have shed their former reputation as “China’s version of [insert western tech company]” and begun to define their business models by their own terms. The market has rewarded them for it too: Baidu gained 60% in 2017, with Tencent and Alibaba each up about 120%, which trumped the price gains achieved by their western competitors. Tencent has cemented itself as the world’s biggest video games company due to its ever-expanding portfolio of mobile games and savvy investments in a broad range of foreign tech firms. Alibaba, meanwhile, has expanded into physical supermarkets in China, where it hopes to build further streams of revenue. Baidu is somewhat lagging, as its relatively small market cap indicates but the company is actively testing autonomous cars.

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How Big Banks Have Invested in FinTech Since 2013

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In the UK at least, fintech has been characterised by challenger banks such as Starling and Monzo opening their (virtual) doors to customers in recent years. However, that does not mean that big banks aren’t getting in on the fun too. Since 2013, premier investment bank Goldman Sachs has completed some 37 fintech-related investments with Citibank trailing with 25 similar deals over the same period. Kensho is one company that has received a lot of attention from Wall Street’s biggest players; Goldman, JPMorgan, Citi and Morgan Stanley all invested in the machine learning startup’s Series B fundraise last year at a valuation of $500m. with the advent of blockchain, it seems like 2018 will see many more fintech deals take place.

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The Earth’s Continents by Population

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Asia remains by far and away the world’s most populous continent with a staggering 4.5bn people, largely from India and China. The two superpowers are now roughly neck and neck in terms of population size, with one unofficial poll, in fact, putting India ahead of China last year. China phased out its one-child policy in 2015, which had stood since 1979, and replaced it with a two-child policy. The impact of these policies on the demographics of the nation have been enormous; many Chinese men are unable to found spouses due to there being around 15% more females than males among millennials in the country. Elsewhere, Africa is expected to witness a population boom between now and 2050, when the population is expected to be in excess of 2bn – and keep growing. Asia is also expected to add another 1bn people in that time, while Europe and the Americas will have stopped growing.

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