Banks are getting nervous about the impact of fintech firms according to new research from PwC. According to the Global Fintech Report 2017, a staggering 88% of global banks are concerned about the revenue impact of fintech firms. This is good news for the firms, especially because 82% of respondents said that were considering an acquisition or partnership with a fintech businesses over the next three to five years.
The reason for this concern by banks, is the pending uptake of non-traditional financial services by consumers, and while specific numbers are unclear, the buyer psychology will concerning for those using traditional, cost intensive, products. This includes more people using online portals for shopping and financial interaction, and being less concerned with trustworthy sources for money transfer and purchase.
Banks are already investing in blockchain technology principally out of concerna that it may become more mainstream, and are attempting to find ways to commodify it through bringing it into existing protocols. Of course, this is counterintuitive, because the blockchain’s biggest selling point is that it’s free, and managed by the community it services.
Other fintech services will be equally difficult to bring under a traditional banking umbrella, especially when a majority of external firms base their product offering on not being a bank, and as a result being able to offer flexibility and more intimate customer service – two things which global banks will realistically never be able to offer at the same level. Another major issue banks are facing is their existing infrastructure, which has been, in most cases, designed as a standalone system, in line with a long-term planning process. For example, most banks began with a traditional interactive online banking service, and expanded their offering in line with a development calendar, and with an end result in mind. New systems will mean a revision of existing infrastructure, including potential adaptation to different programming languages, and a requirement to undertake a complete review of the customer experience.
Importantly, this is a wholesale shift from traditional banking, questions will no doubt be asked as to whether it may be wiser for banks to distance themselves as much as possible from the bitchain technologies, rather than continuing the extraordinary level of uptake – with 55% of respondents to the PwC report saying they would be undergoing a blockchain adoption process by 2018, and 77% aiming to move to some form of blockchain technology by 2020.