New research has revealed that 58 per cent of banking professionals were either ‘somewhat agreed’ or ‘strongly agreed’ that Google, Apple, Facebook and Amazon (GAFA) would in some way replace banks in the next five years.

Trade show FinTech Connect surveyed 364 respondents from financial institutions and FinTechs, finding that 68 per cent saw Brexit as having a ‘negative’ or ‘disastrous’ impact on their businesses.

However, the biggest obstacle for financial services firms was legacy infrastructure – which 85 per cent felt that was ‘significant’ or ‘extremely significant’ in preventing digital transformation.

Stephane Malrait, head of market structure and innovation for financial markets at ING, said: "One of the main goals of digital transformation is to not re-create the next generation of legacy infrastructure, but to focus on customer value creation driven by a component-based architecture which can evolve or be changed over time by simple API integration."

Entrenched executives, under-investment and lack of resources were also seen as ‘significant’ or ‘extremely significant’ by 65 per cent, 64 per cent and 63 per cent of respondents, respectively.

In the case of digital challenger banks, 78 per cent of respondents said regulatory and compliance issues represented the biggest obstacle to growth.

The report suggested that this is likely why the competitive landscape between incumbents and challengers is changing. When asked about challengers, 40 per cent responded with ‘I love them, they bring innovation to a stagnant industry’, while 61 per cent said that their organisation’s strategy in dealing with challenger banks was to collaborate in some way - be that by partnering or buying.

Johan Lorenzen, vice president for digitalisation and innovation at Handelsbanken, commented: "Traditional retail banks still struggle to adopt technology that has been mainstream for years while potential disruption from GAFA and initiatives like The Libra Foundation looms on the, not very distant horizon."

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