UK financial services firms fear up to 40% of revenue at risk from FinTech

  • Six-in-ten UK financial services firms say up to 40% of revenues are at risk from FinTech.
  • Over half (56%) will adopt Blockchain solutions the next 2 years.
  • PwC in Northern Ireland is the global centre for PwC Blockchain commercialisation. 
  • Almost half (47%) plan FinTech acquisitions in next 3-5 years.
  • Over a third (39%) plan to invest in cyber security.

 

More than half (61%) of UK financial services (FS) firms believe they could lose up to 40% of their revenue to new and emerging standalone FinTech firms, according to a new PwC report. However, as the industry responds to threats, new solutions like Blockchain – where Belfast is a global centre for excellence – are expected to be increasingly used.

The report, Redrawing the lines: FinTech’s growing influence on Financial Services, says that almost half of UK FS firms (47%) will respond by trying to acquire FinTech providers over the next 3-5 years, with eight-in-ten (81%) planning strategic partnerships with FinTechs over the same period.

To help inform the report, PwC interviewed over 1,300 FS leaders worldwide, including 57 from leading UK undertakings.

The report says that start-ups, large technology companies and social media/ internet platforms are expected to be the top FinTech disruptors in the UK FS sector over the next five years, with consumer banking, funds transfer and payments the top three areas of business likely to be impacted. The key challenges to the sector from FinTechs are expected to come from increased price competition, loss of market share and threats to information security and privacy.

“FinTech" is shorthand for new financial technologies. It is a dynamic segment of the FS sector that is gaining significant momentum and causing disruption to the traditional value chain (see Notes).

The report also finds that Blockchain is coming out of the lab to become embedded in delivery solutions. PwC found that 56% of UK FS leaders interviewed planned to adopt Blockchain solutions by the end of 2018, predicting that Blockchain will be adopted in a number of key areas including digital identity (53%), payment infrastructure (45%), and funds transfer (42%).

Blockchain technology, consists of "blocks" of data in a digital ledger, is highly resistant to malicious tampering, thus offering significant security advantages to governments, banks and the financial services sector.

The UK is ahead of most of the rest of the world in its understanding of Blockchain technology, with over a third (35%) of UK financial services firms saying they are now ‘very’ or ’extremely’ familiar with the technology. PwC in Northern Ireland is the global centre for PwC specialists who exploit and commercialise Blockchain. 

 

Commenting on the report and its findings, Steve Davies, EMEA FinTech leader at PwC, said:

 

“The financial services industry has embraced FinTech to help drive change and innovation. FinTech collaboration, and wider innovation is not about jumping on the latest bandwagon - it’s about finding the best, most efficient way to deliver your business strategy and ultimately better serve your customers.

 

“Embracing FinTech is as much about different ways of working and problem solving as it is about deploying new technology. A sustained focus on innovation is much needed and can only be a good thing for customers, and the firms themselves. 

 

"Activity in the UK ranges from partnering with FinTechs start-ups, financing in-house incubators, and deploying new solutions, to testing opportunities in areas like Blockchain. There are few overnight successes and, unsurprisingly, as much perspiration as inspiration. There is a tension between the time needed for new ideas to mature and the expectations of firms seeking to collaborate with FinTech start-ups.”

 

UK financial firms believe the top three opportunities brought about by FinTech are expansion of products and services, leveraging existing data sets and increasing their customer base.

Retaining customers in light of the rise of FinTech is a key priority and UK firms say the main issues they need to address in order to keep hold of their customers are intuitive product designs, faster services and lower costs.

Over three quarters (77%) of UK financial services firms told PwC that they plan to invest in data analytics in the coming year and more than a third (39%) plan to invest in cyber security.

Ends.

 

Notes to editor.

1. Steve Davies is available for interview. Please contact Ellie Raven on ellie.raven@pwc.com or +44 (0) 207 804 3663.

2. “FinTech" is a shorthand for new financial technologies. It is a dynamic segment of the Financial Services sector that is gaining significant momentum and causing disruption to the traditional value chain. FinTech sits at the intersection of the financial services and technology sectors where technology-focused start-ups and new market entrants disrupt and innovate the products and services currently provided by the traditional financial services industry.

3. PwC’s 2017 Global FinTech Survey is based on the responses of 1,308 participants, principally CEOs, Heads of Departments, Heads of Innovation, Heads of IT/ Digital/ Technology from 71 countries spread across six regions and a variety of industries including banking, asset management, fund payments, insurance, reinsurance and FinTech. The UK survey comprises answers from 57 respondents. The majority of respondents are from large companies, but small and medium sized companies also took part in the survey.

4. The survey also includes insights and proprietary data from PwC’s DeNovo platform. DeNovo provides on-demand consulting about FinTech and emerging technology. The platform can be used to search for analysis on specific start-up companies, emerging technologies and industries. It allows you to assess the impact of innovation on your business and follow the topics, trends and companies that interest you. To try DeNovo for free, or upgrade to DeNovo Premium for deeper strategic analysis and direct access to subject matter experts, please visit: https://denovo.pwc.com

Contact us

John Compton
Corporate Affairs, Northern Ireland and Deputy Head of UK Media Relations
Tel: +44(0)7799 346 925
Email

Follow us: