FinTech Global Survey 2017
As the impact of FinTech competitors rise, mainstream Financial Institutions will need to innovate faster and forge effective partnerships with multiple start-ups to stay ahead. PwC’s Global FinTech Report 2017, which surveyed more than 1300 financial services organisations from 71 countries, assesses the continued rise of new business models and emerging technologies in the Financial Services sector.
More than 80% believe their business is at risk of being lost to standalone FinTech companies within the next 5 years, an increase from 28% in 2016.
Partnering and integrating has become an important global response to disruption, however few believe they can do it well.
With 82% of incumbents planning to increase partnerships with FinTech over the next 12 months and just 28% rating themselves as good at co-creating with start-ups.
Blockchain is moving out of the lab. This is an area with the fiercest competition, shown here in the 77% of respondents planning to include blockchain as an in-production system or process by 2020.
Focus areas of use for blockchain technology include payment infrastructure (55%), funds transfer infrastructure (50%) digital identity management (46%) and post-trade settlement (36%).
PwC’s AsiaPac FinTech Leader, John Shipman, says how quickly institutions in Australia can respond and create an innovative marketplace for their customers, by effectively partnering with multiple start-ups, will determine their ability to seize a competitive advantage over rivals.
“There is a window of opportunity to leverage innovative new technology companies before major technology houses based in the US and China seriously target Financial Services market in Australia,” he says. “On a global scale, Australia ranks behind the likes of the US, Europe and China as a priority location for disruptive companies looking for scale, creating a potential lag in their inevitable expansion here.”
The big four players dominate Australia’s banking sector and have the ability to make significant global investments in new technology vendors in order to move quickly, Shipman says, but the local industry needs to keep pace with flourishing Fintech locations such as Singapore and Shanghai.
Continued investment and partnering, whilst keeping an eye on other successful regions will allow for quick response to the FinTech opportunities and will ultimately have flow-on benefits to the domestic economy, Shipman notes.
Partnering and integrating has become an important global response to disruption. According to the Global FinTech Survey, some 82% of incumbents plan to increase partnerships with FinTech over the next 12 months.
“Given Australia’s isolation, local companies have a well-developed partnering culture,” Shipman says. “But the FinTech challenge will require partnering on a much more significant scale and with less mature organisations.” That will require Australia’s financial services sector to develop new skill sets and to train dedicated staff in new capabilities, Shipman says.
The need for Australia’s financial services players to integrate and partner also applies to blockchain. “There is a way to go before blockchain is ‘enterprise-hardened’, and it is still settling in, in terms of who are going to be the winners and losers in the core product and protocol space”. Shipman says.
PwC Australia’s digital asset services are in collaboration with international players, including enterprise blockchain solutions provider Bloq, blockchain integration, reporting, compliance and analytics provider Libra, and digital identity provider Netki. That collaboration can allow the platform to deliver new digital revenue streams to their clients by utilising next generation technologies out of Australia, the US, and Europe.