NEW YORK (3/17/16)--Traditional financial service firms are feeling the heat from nontraditional competitors--big time.
Results from a new survey from PricewaterhouseCoopers assessing the rise of new technologies in the financial services reveal that 95% of banks believe their businesses are threatened by standalone financial tech (fintech) companies.
Overall in the financial services sector, 83% believe their businesses are at risk.
What’s more, fintech companies themselves anticipate they could capture 33% of the incumbents’ business.
The survey shows the banking and payments industries are feeling the most pressure from fintech companies. Respondents from the fund transfer and payments industry anticipate that in the next five years, they could lose up to 28% of their market share to them, while bankers estimate they are likely to lose 24%. This compares with roughly 22% in the case of asset management and wealth management and 21% in insurance.
Two-thirds (67%) of financial services companies ranked pressure on profit margins as the top fintech-related threat, followed by loss of market share (59%). One of the key ways in which fintechs support the margin pressure point through innovation is improvements in operating costs. For instance, the movement to cloud-based platforms not only decreases upfront costs but also reduces ongoing infrastructure costs.