Bankers are apprehensive that they could lose up to a quarter of their revenue over the next five years due to the rise of new financial technology (fintech) firms, according to a survey by PricewaterhouseCoopers (PwC).
Incumbents opined that 23% of their business could be at risk owing to emerging fintech, while fintech firms themselves believed that they could capture 33% of the incumbents’ business.
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Out of the survey’s respondents, 83% from traditional financial services (FS) firms held the view that their business could be lost to emerging fintech firms, while 95% of banks felt the same.
According to 67% of FS companies, the key challenge posed by fintech firms was pressure on profit margins, while 59%said it was loss of market share.
The survey highlighted joint partnership as the most widespread form of alliance with fintech firms, which was cited by 32% respondents.
For FS firms, IT security (53%), regulatory uncertainty (49%) and differences in business models (40%) were the inhibitors while dealing with fintech companies. For fintech firms, differences in management and culture (54%), operational processes (47%) and regulatory uncertainty (43%) were the key challenges in dealing with traditional FS firms.
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By GlobalDataPwC EMEA fintech leader Steve Davies said: "PwC estimates within the next 3-5 years, cumulative investment in fintech globally could well exceed $150bn, and financial institutions and tech companies are a stepping over one another for a chance to get into the game.
"As the lines between traditional finance, technology firms and telecom companies are blurring, many innovative solutions are emerging and there is clearly no straightforward solution to navigate this fintech world."
