The majority of UK financial services firms believe that up to 40 per cent of their revenue is at risk of being lost to standalone FinTech firms, according to a new PwC report.

The Redrawing the lines: FinTech’s growing influence on Financial Services report found that 61 per cent of UK financial services industry leaders believe that they could lose as much as 40 per cent of their revenue to standalone FinTech firms, compared to 51 per cent of financial services leaders globally.

However, almost half of the UK firms surveyed (47 per cent) said that they have FinTech acquisitions planned over the next three to five years. Additionally, 81 per cent said that they plan to initiate strategic partnerships with FinTechs over the same period, according to the survey of more than 1,300 financial services industry leaders worldwide.

Startups, large technology companies and social media/ internet platforms are expected to be the top FinTech disruptors in the UK financial services sector over the next five years, with consumer banking, funds transfer and payments the top three areas of business likely to be impacted. The key challenges to the sector from FinTechs are expected to come from increased price competition, loss of market share and threats to information security and privacy.

Commenting on the findings, Steve Davies, EMEA FinTech leader at PwC, said: “The financial services industry has embraced FinTech to help drive change and innovation. FinTech collaboration, and innovation more widely, is not about jumping on the latest bandwagon - it’s about finding the best, most efficient way to deliver your business strategy and ultimately better serve your customers.

“The UK’s financial sector seems to have a more realistic understanding of the long term returns on targeted investments. Managing expectations around returns is important, particularly for firms facing significant cost pressures.”

Other highlights from the report include the fact that over three quarters (77 per cent) of UK financial services firms said that they plan to invest in data analytics in the coming year and more than a third (39 per cent) plan to invest in cyber security.

Meanwhile less than a quarter (22 per cent) of UK banks, insurers and asset managers said that they currently interact with their customers using mobile applications, compared to 28 per cent globally.

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