Banks fear fintech’s disruptive potential, says new report
More than three quarters of banks from around the world fear the impact that fintech could have on their business, according to a new report published by PwC.
The report highlights that as many as 76% of banking respondents included in the report believe that sections of their business may be at risk due to fintech. Some fintech trends such as the rise of peer-to-peer lending, the increased services and solutions for underserved customers and the emergence of self-service tools are just some of the methods that fintech companies and start-ups are using to win business away from traditional banks.
It is this increased focus on the customer, which is perceived as a traditional weak spot for banks, that is seen of one the biggest advantages for fintech, enhancing their ability to become a disruptor in the sector.
The report urges financial institutions to embrace this disruption “from the outside in” that fintech provides. It states: “By focusing on incorporating new technologies into their own architecture, traditional financial institutions can prepare themselves to play a central role in the new financial services world in which they will operate at the centre of customer activity and maintain strong positions even as innovations alter the marketplace.”
Irish banks, however, are not as susceptible to getting left behind by growing trends in the industry, according to PwC. In fact, they are quicker than many of their global counterparts in responding to the latest innovations within the industry.
PwC Ireland fintech leader John Murphy says: “Customers want convenience, personalisation, accessibility and ease of use. To live up to these expectations, banks and fintechs should focus on opportunities that leverage each other’s strengths, whether in product design and development by start-ups, or distribution and infrastructure capabilities by banks.
“Fintechs are great at offering product simplicity and seamless integration, but they lack the proper IT security and regulatory certainty that banks have. We see both sides coming to the realisation of a new, mutually beneficial relationship and it’s ultimately the customer who will benefit from this.”
