Report finds banks are struggling to keep up with FinTechs

FinTech providers are making increasingly significant inroads with customers, yet the vast majority of banks admit they are not adequately prepared to manage this emerging disruption.

That’s according to the 2016 World Retail Banking Report, released by Capgemini and Efma. It found that nearly two-thirds of customers (63%) are now using FinTech products or services, and are much more likely to refer friends and family to their FinTech provider (55%) than to their bank (38%). However, while 96% of banking executives agree that the industry is evolving toward a digital banking ecosystem, where Fintech providers play a much bigger role, only 13% say they have the systems in place to support it.

With penetration highest in the emerging markets and among younger customers, Fintech service providers are gaining popularity among consumers thanks to the perception that they are easy to use (82%), offer fast service (81%), and provide a good user experience (80%). Banks, however, underestimate the value placed on these services with only 36% agreeing that FinTechs offer fast service (a 45 percentage point gap) and only 40% agreeing that Fintechs provide a good experience (a 40 percentage point gap).

Banks view trust as their greatest strength (70%), but while they currently enjoy higher rates of customer trust, FinTech firms are quickly catching up, with the percentage of customers who completely or somewhat trust their FinTech provider reaching more than 88% across all regions

Report finds banks are struggling to keep up with FinTechs TechNative
Image: World Retail Banking Report

“The inability of banks to innovate leaves the door wide open for FinTech providers to attract new customers,” said Anirban Bose, Head of Global Banking and Financial Services, Capgemini. “There is opportunity for banks to begin working collaboratively with these companies, but they must formulate a rapid response plan to do so before the swiftly evolving bank environment outpaces their window for change.”

Banks and FinTechs have strengths that are complementary and which should be leveraged to create a stronger central financial experience for customers. While FinTechs excel in agility, innovation and exploiting new technology, banks offer capital, deep customer bases and expertise in working with regulators. According to the report, banks need to “think big” as they strive to meet evolving customer demands in the digital age.

“The willingness to partner with FinTech firms is a recognition that banks are unprepared to operate in a future that consists of a series of secure digital interconnections,” said Vincent Bastid, Secretary General, Efma. “By partnering with these companies, banks can gain much needed guidance in product development, as well as a stronger voice in defining a central role for themselves in the current banking environment.”

Capgemini recently announced a huge expansion of it’s blockchain practices and is collaborating with FinTechs to develop innovative blockchain solutions on Micro Payments, Syndicate Loans, Asset Management and Claims Handling.

For more information and to download the full report, visit: www.worldretailbankingreport.com

Tags : BlockchainCapgeminiFinTech
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