Incumbents ‘feel threatened’ by digital challengers
Written by Hannah McGrath
More than three quarters of banking incumbents (80 per cent) identify digital challengers as a threat to their business, with almost one third (30 per cent) expecting them be the most disruptive force in the industry in the coming year, according to a new study.
The survey of banking professionals at 50 organisations, commissioned by payments software and card firm Fraedom, also found that other trends sets to disrupt the traditional banking landscape over the next 12 months are digitalisation (36 per cent) and the consumerisation of technology (36 per cent) as banking apps begin to integrate with new technologies such as wearables.
As a result, bankers expect to invest heavily in updating legacy systems (44 per cent) and new technology (26 per cent) in 2019. Almost half of those asked (46 per cent) said they perceived their legacy systems to be the most significant barriers to the growth of commercial banks, while 32 per cent cited the pressure to save money.
In a similar vein, the survey found that over half (53 per cent) of respondents believed that artificial intelligence (AI) and machine learning will be the technologies to have the biggest impact on commercial banking in 2019.
Kyle Ferguson, chief executive of Fraedom, said: “With challenger banks setting themselves apart by offering innovative technology platforms, commercial banks are now realising they must invest in key areas in order to counter this threat.”
He added that it was now clear to see that challenger banks are a disruptive force within the sector and warned that they were using technology to “plug a gap left by established retail banks”, adding that their model should act as a “stark warning” to banks within the commercial space which remains open to similar disruption