Pioneering Change: Building A Thriving Fintech Industry The message to the banking, financial services, and insurance sector is clear: innovate to survive; innovate to thrive.

In 1965, Intel co-founder Gordon Moore mapped a trend that would predict the pace of tech development in the coming decades. Known as Moore's Law, his work paved the way for the economies of scale in computing that triggered the digital revolution.

Since then, technology has transformed daily life– often solving problems we didn't know we had. While industries such as communications, transport and sustainability have all reaped the benefits, now we see financial institutions turning to tech in a gold rush worth US$867 billion in 2016, according to Forbes.

Fintech has been part of our vocabulary for decades, but as the pace of innovation continues to accelerate, it is adopting an entirely new meaning. It has emerged from behind-the-scenes tech to an essential tool to boost customer centrality. Rising technologies such as open banking, blockchain, machine learning, and AI are changing business operations and revenue models, as consumers demand and embrace more open and diverse styles of banking.

In recent years, many financial services firms have hedged their bets on these technologies, and the coming years will see their investments pay dividends– in its 2017 Global Fintech Report, PwC calculates annual ROI to average 20% on fintech-related projects. As with those who found themselves on the back foot during the initial digital revolution, those who refuse to accept change will slowly lose out.

During this period of flux, it is equally important to support incumbents, as it is to support the companies driving and facilitating change. PwC states 82% of incumbents expect to increase fintech partnerships in the next three to five years, an essential move to bridge the gaps and create win-win scenarios.

However, the role of government remains key. In the UK, where, fintech investments totaled $1.156 billion in 2016, a regulatory sandbox operated by the Financial Conduct Authority allows live testing of products, services, business models and delivery mechanisms. Adhering to similar principles, in May of this year, Dubai Financial Services Authority announced its Innovation Testing License, and in 2020, Dubai's will become the first blockchain government, under the Dubai Blockchain Strategy.

Related: Surging Ahead: Fintech Startups In The Middle East

At the end of 2015, the Middle East was home to 105 fintech startups with 30 located in the UAE, the highest concentration of any country. As the central point between East and West, the UAE is favorably positioned to capitalize on its geography and its appetite for innovation is already driving an ambitious strategy to re-write the economic DNA of the country, through the creation of its knowledge economy. A thriving fintech industry is a natural continuation of this work.

One of the great initiatives in the region I admire is the Dubai Future Foundation. Founded by H.H. Sheikh Mohammed bin Rashid Al Maktoum, the foundation was launched to play a pivotal role in shaping the future of Dubai. Having already successfully launched innovation initiatives such as Dubai 10X, Dubai Future Accelerators, the Global Blockchain Council, and many more, this foundation is an inspiration for leading bodies around the world.

Another inspiration in the region I would like to highlight is the work of Emirates NBD. It is amazing to see a bank of such size and prestige recognizing the changing face of the global financial services industry and working so hard to innovate internally. They are undoubtedly setting global precedent and leading in terms of setting an innovation agenda in the banking sector.

As capital moves out of traditional industries, such as oil and gas, large sums will become available to those who pioneer fintech, and this will have a crucial role in financing larger, transformational projects and companies, on both the domestic and global stage.

In the run up to 2020, the message to the banking, financial services, and insurance sector is clear: innovate to survive; innovate to thrive.

In the simplest terms, this means invest in development at all stages of growth, from seed to transformation, and collaborate in the truest sense of the word. Organizations large and small, governments, entrepreneurs and startups must create a culture for innovation in order to survive under the new rules of business. They must also remain agile in their structure and funding to thrive in an increasingly challenging environment.

However, the greatest lesson will come from the consumer– the unassuming driver of so many recent transformations. Innovative technology is only part of the battle; to win the prize, companies must adopt fintech as a means to connect with their end users, before their competitors do.

Alastair Lukies CBE will speak about the public and private sector's roles in fintech at the Naseba Fintech Summit on October 30, 2017, in Dubai. Click here for more details about this event.

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