Financial Houses Risk Losing 25% Business Share To Technology Firms

According to the results from a PwC survey released recently, which assesses the rise of new technologies in the financial services sector and their impact on market players, banks and other financial institutions are at the risk of losing about 25 per cent of their business incomes to standalone financial technology (FinTech) companies.

The survey revealed that 83 per cent of respondents from traditional financial services firms believe part of their business is at risk of being lost to standalone FinTech companies, reaching 95 per cent in the case of banks.

The survey shows the banking and payments industries are feeling the most pressure from FinTech companies.

The report, ‘Blurred Lines: How FinTech is shaping Financial services’, features the responses of 544 CEOs, Heads of Innovation, CIOs and top management involved in digital and technological transformation across the FS industry in 46 countries. Incumbents believe 23 per cent of their business could be at risk due to further development of FinTech.

FinTech companies themselves anticipate they could capture 33 per cent of the incumbents’ business. Respondents from the fund transfer and payments industry anticipate that in the next five years, they could lose up to 28 per cent of their market share to them, while bankers estimate they are likely to lose 24 per cent.

This compares to around 22 per cent in the case of asset management and wealth management and 21 per cent in insurance. Two-thirds (67 per cent) of FS companies ranked pressure on profit margins as the top FinTech-related threat, followed by loss of market share (59 per cent).