Major global financial institutions could lose as much as 25 percent of their revenue to fintechs in the next years.
Over 1,300 financial industry executives were polled by PwC, with 88 percent saying they feared their business was at risk from financial technology specialists. The most vulnerable areas for innovation and dilution being in payments, money transfers and personal finance.
Within the traditional bread and butter bank offering, consumer services such as personal loans, were seen as most at risk, according to PwC’s annual «Global FinTech Report» published this week.
Banks along with multi national financial institutions face having their golden rice bowls broken from the rapidly growing fintechs who are leveraging the new technologies, bringing cost efficient and user friendly solutions to end users.
Collaboration Not Competition
The traditional banking industry is expected to increase collaboration with financial technology companies and innovators, with 82 percent of respondents to the PwC survey saying partnerships with fintech firms would increase over the next three to five years.
As a result, a mutual understanding is emerging between the two parties. Fintech startups require access to capital and customers provided by incumbents, and big financial firms are starting to understand how the new technology could be the key to finally overcoming legacy technological and customer communication issues.
Blockchain is Working
«FinTech collaboration, and innovation more widely, is not about jumping on the latest bandwagon - it’s about finding the best, most efficient way to carry out your business strategy and ultimately better serve your customers,» said Manoj Kashyap, Global FinTech leader at PwC.
The PwC report makes it clear that blockchain is moving from hype to reality and real life use cases are set to become much more common. With the potentially huge back-office cost savings and transparency gains blockchain can provide, the technology will receive increasing investment as finance firms explore its ability to ensure they are fit for future growth.
