Demographic transition changes the financial industry

Sven Enger und Stefan Jenzowsky.

Payment services from high-tech companies like Apple Pay, Google Pay or Amazon Cash threaten the traditional financial industry for quite a while now and the progress in cryptocurrencies come in addition. Also, the field of artificial intelligence has an increasing impact on the financial industry. Steadily, new and convenient products, aimed at the final customer, are released, which enable everyone, to conduct financial operations and investments through manageable software programs without having to rely on a traditional bank.

Not only banks but also insurance companies are affected. And additionally, the customers trust in the financial industry broke during the financial crisis. Through social and demographical changes, the loss of trust gets even worse. Therefore, the continuous over-aging of German society causes increasing costs with direct affects on pensions. Who will inherit these additional costs? The ‘Rürup-comission’ already calculated the upcoming costs caused by pension policy during the legislation period of chancellor Gerhard Schröder. The conclusion was definite: If nothing changes, the young generation in 2040 will pay exorbitant high dues.

Consequently, the so-called sustainability factor got inaugurated. It means in effect that the pension levels are linked to the number of receivers. Thereby, the young, upcoming generation should be relieved to some extent, because an increasing number of pensioners should be financed by a decreasing number of contributors. However, it seems like this model is no longer sustainable in the meantime. Entrepreneur and Global Topspeaker Sven Enger was a long-term manager at large insurance companies. He critically observed the development of retirement arrangement and pension. The Global Topspeaker often causes attention with his book “Alt, arm und abgezockt” and his same-named lecture. According to him the statutory pension is not a safe option for many years. Even the personal pension schemes are not a safe option any more. The prognoses for yields and interests of life insurances are, according to the Global Topspeaker, no longer bearable. “My statements should be understood as a wake-up call, there are alternatives to classic pension schemes”, says the Global Topspeaker Sven Enger.

There will be alternatives in pension schemes, because of the ongoing, technological development and the new disruptive business models in the financial industry, which is also the strong opinion of Engers Global Topspeakers colleague Stefan Jenzowsky. The managing director of “2b AHEAD Ventures”, a subsidiary of Europe’s biggest futurology institute “2b AHEAD”, notices since multiple years that digitalisation and AI, next to many other fields in economy and the entire financial industry, cause an enormous turmoil. According to the Global Topspeaker the time for some significant and creative changes, especially in such a traditional industry like the financial one, should be right now. On one hand it would protect the companies from competitive pressure, on the other hand it would open chances for newly developed business plans.

It is a fact that the new and digital competitors like FinTech-corporations became the new strategic leaders and already occupy the contact between customer and the traditional universal banks. Their impact will grow over the next years. In his lecture “Creative disruption in 2025 – Business models of the future”, Stefan Jenzowsky describes how the destruction of business models works, which developments will be enforced, and which business models are interesting for investors. “Without creative disruption there will be no development”, utters the Global Topspeaker, with his view on the world-wide spread, conservative attitude towards the financial world.

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