An emerging crop of new financial technology (Fintech) startups is seen as a major threat by the mainstream financial institutions and banks, research conducted on the UK Financial and Banking sector revealed. The report named MoneyLive, compiled by the Marketforce LIVE, noted that the banking sector in the UK sees the new Fintech companies as a threat for their business models and future existence. The report was compiled after taking into account the views expressed by 600 prominent executives working in the UK’s banking and finance sector.
Fintech Firms and Disruption
The report was aimed to find out how the traditional financial executives perceive the emergence of new Finctech companies and their subsequent effect on their existing business models: customer base, and business prospects in the future. According to the respondents polled, 81 percent believed that service quality and customer experience are the biggest determinants of customer acquisition and their subsequent retention, contrary to the widely held belief that trust on the banking brand is the biggest differentiator. What adds to their woes is the fact that 79 percent of the executives believe that new Fintech firms offer more customer-oriented and engaging brand experience to the customers.
Business Model revamp
Expectedly, a large 59 percent believe that they need to upgrade their business models in the near future substantially; otherwise, Fintech firms will wean away a chunk of their existing customers. One of the excerpts of the report signifies that the financial executives are well aware of the disruption caused by digital players like Amazon, UBER. Airbnb etc. and they know if they fail to match up to the capabilities of the fintech players, it would be difficult to survive for them.
71 percent of the total respondents admit that they are not able to keep pace with these technology intermediaries in terms of brand messaging in the areas of convenience, speed, and simplicity. The report, however, claims that there is no consensus on the fate of traditional banking services once the new Financial Technology firms take the substantial business volumes.While 31 percent see this disruption as an opportunity for the challenger banks while 30 percent believe that the new fintech firms will take over the rule of the traditional banking model.
Well-versed of the looming threat from Fintech organizations in both medium- and long-term, a whopping 93% agreed that in the period of next five years, their existing business model has to go under a fundamental and comprehensive change in order to survive the onslaught of financial Technology firms.