PwC: How fintech is transforming FS and TMT firms
What is fintech?
“Fintech is a combination of technology and financial services that’s transforming the way financial businesses operate, collaborate, and transact with their customers, their regulators, and others in the industry,” commented .
In the last decade alone organisations have been harnessing cutting edge technologies within the fintech space, with many evolving to be tailored for specific functions within the ecosystem including regtech and insurtech.
The current landscape
“Emerging technologies have given companies a low-cost way to create convenient, personalised, data-intuitive products and services,” added PwC. “Fintech has also lowered the barriers to entry for firms — from established FS groups to startups to TMT entrants — and has therefore created a complex web of cooperative competition, or ‘coopetition,’ and collision.”
In a recent survey conducted by PwC the company discovered that while financial services (FS) and Technology, Media and Telecommunications (TMT) firms have different ideas when it comes to driving change with FinTech, both sectors have similar challenges when it comes to digital transformation strategies.
One key finding within PwC’s report included, more than half of FS leaders believing that artificial intelligence (AI) will be the biggest driver of change when it comes to the delivery of financial services in the next two years, while TMT executives believe that the internet of things (IoT) will be a game changer.
“In an era of increased focus on data, hyper-personalisation and ‘always-on’ connectivity, it’s unsurprising that AI and IoT top the list. But our survey highlights recurring challenges and concerns in implementing these technologies, including long delays in developing market-ready products and services, and difficulties managing regulation, safeguarding data and earning customers’ trust. In asset and wealth management (AWM),” commented PwC, who discovered that only 30% of insurers in its survey think IoT will be transformational, even though there is high potential for insurers to use the technology to make risk management more proactive and develop new business models.
Other key findings from the report included:
- 47% of TMT and 48% of FS organisations have fully adopted fintech into their strategic operating model
- 44% of TMT and 37% of FS organisations have incorporated emerging technologies into their products and services
- Those that engage with fintechs are more likely than those who haven’t to be confident about their future revenue growth and competitive edge
- FS executives believe that harnessing fintech will improve the ease and speed of their services which will be key to retaining customers, while TMT leaders see personalisation as the key to keeping customers
- 80% of TMT and 75% of FS organisations are developing jobs related to fintech, however 42% of TMT and FS organisations are struggling to fill these types of role
- 78% of TMT and 76% of FS firms are targeting businesses within their own sectors when it comes to acquisitions, strategic alliances or joint ventures , while 44% of TMT and 47% of FS organisations are targeting a company that specialise in fintech.