FS firms ‘responding slowly’ to FinTech threat
Written by Dave Adams
Financial services companies believe FinTech could threaten 23 per cent of their business – but FinTech companies feel they could capture up to a third of the financial services market, according to a new report from PwC.
The report, Blurred Lines: How FinTech is shaping Financial Services, considers the impact of new technologies on the sector and incorporates a survey of 544 CEOs and other senior executives and managers working in the FS industry in 46 countries. One fifth of the sample work for FinTech companies. More than eight out of ten (83 per cent) respondents working for FS firms think they could lose business to FinTech companies.
Two thirds of all FS personnel surveyed see pressure on margins as the top threat from FinTech companies. Almost six out of ten anticipate a loss of market share. The sub-sector where respondents fear losing the largest share of their business is the fund transfer and payments industry, which fears losing 28 per cent of its market; compared to lower levels of market loss predicted in banking (24 per cent), asset and wealth management (22 per cent) and insurance (21 per cent).
The report also highlights the disruption likely to be associated with blockchain distributed ledger technology. PwC has identified over 700 companies entering this space, including 150 it describes as “ones to watch” and 25 it expects to emerge as leaders. Although 56 per cent of FS respondents recognised the significance of blockchain, 57 per cent said their firms were either unsure how to respond or unlikely to respond at all.
“Given how fast technology is changing and lines are blurring, no business can afford to rest on its laurels,” said Steve Davies, EMEA FinTech leader at PwC. “Those who do not act now are at risk of falling behind as FinTech changes the industry from the outside. Incumbents cannot afford to ignore this trend. Nevertheless, our survey shows that 25 per cent of firms currently have no interaction at all with FinTech companies.”
In January, research from FinTech company TransferWise showed that 32 per cent of 9,000 consumers in Europe, Asia Pacific and North America had already used a FinTech firm to access some kind of financial service; and that in five years’ time almost half would expect to use a technology provider for at least one service that a bank would usually provide, while almost a third expect to use a technology provider for half or more of their financial services requirements.
The PwC survey can be downloaded here: http://www.pwc.com/fintechreport