As OTT services grow in value, telco revenues are moderating and the lack of growth opportunities in the core business is driving telcos to look at adjacencies.
Fintech is disrupting traditional financial services and offers a high value adjacency for telcos to play in where they can maximise their natural strengths.
Over the past 50 years, Telcos have delivered a strong value proposition through their network infrastructure by allowing us to instantaneously connect with each other. Through this period, they continuously developed their networking capabilities, improving speed and capacity. With the growth of the internet and wireless technology in the early 1990s, Telcos invested heavily in the development of the modern Telco infrastructure and have since become deeply entrenched within society through their mobile, voice and broadband services connecting the world together.
However, the advent of the internet has seen many over-the-top services like Facebook, Amazon, Netflix, and Google build higher value services over Telco infrastructure assets and enjoy significant growth, diminishing the value of Telcos in the process. Telcos understand that in order to sustain long-term growth, they will need to explore new avenues of growth through vertical adjacencies to capture the value their infrastructure creates. Fintech and financial services are areas ripe for disruption as mobile and e-commerce become increasingly relevant for consumers in the conservative and slow-paced financial industry. Telcos around the world are committing their efforts to enter the fintech space – an adjacent ‘everyday’ sector that offers multiple synergies – in order to capture a greater share of the consumer wallet and deliver higher value services. In this report, we explore the need for Telcos to diversify into other adjacencies, why fintech makes sense for Telcos, Telcos and their fintech strategies, global trends, Australian Telcos and fintech, as well as the risks and challenges that Telcos need to overcome.