Europe was the fastest-growing region for financial technology (fintech) ventures globally between 2013 and 2014, according to a report from Accenture.
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The Future of Fintech and Banking report revealed that despite the US still holding the majority share of fintech investment, Europe saw a growth rate of 215% reaching $1.48bn in 2014.
Global investment in fintech ventures tripled from $4.05bn in 2013 to $12.2bn in 2014, with fintech investment increasing more than three times the rate of overall venture capital investment.
The UK and Ireland made up two-fifths of Europe’s growth rate (42%), with investment rising from $264m in 2013 to $623m in 2014.
Other European regions to experience high growth in 2014 were the Nordics ($345m), the Netherlands ($306m) and Germany ($82m).
The report was unveiled at the investor day of the FinTech Innovation Lab London.
Accenture managing director Julian Skan, who is overseeing the lab, said the massive investment in fintech shows the digital revolution is well-advanced in financial services, and represents both a threat and an opportunity for banks.
“Fintech is empowering new competitors and startups to move into parts of the banking business but, paradoxically, it is also helping banks to create better, more convenient products and services for their clients," he said.
"It is also leading to increased co-operation between traditional banks and innovative startups and technology businesses in a way that can result in totally new business models and revenue streams.”
The report also revealed that many banks are not ready for the digital revolution, after a survey of 25 senior banking executives showed 72% believe their banks have a “fragmented or opportunistic approach” to digital innovation.
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Of those questioned, 40% said their organisations are too slow to deploy new technology, while four out of five said their banks are “somewhat” or “minimally” equipped for the digital age due to a lack of skills and culture in their organisations.
Furthermore, 80% agreed that working with startups is a valuable way of bringing new ideas to the business. However, more than half (56%) said their organisation needs to change its culture to work effectively with startups.
Only half of those questioned claimed their banks have a strategy for replacing old technology, with 44% admitting they do not invest enough in innovative technologies.
Accenture financial services group chief executive Richard Lumb said banks are starting to realise the full potential of digital technologies and their potential to disrupt and transform the banking industry.
“The leaders recognise that digital goes far beyond channel and process innovation – it dissolves industry boundaries and provides opportunities for new business models and competitors, and banks have no choice other than to innovate to remain relevant to their customers,” he said.
Some 72% of respondents said they expect their banks to increase investments in technology over the next two years, with more than half (56%) saying they will explore “open innovation” such as opening their intellectual property, assets and expertise. In addition, 32% said they have plans to create a corporate venture arm within the next two years.
The report also revealed that banks are open to collaboration with other organisations outside of their industry, with 60% claiming to be open to “sacrificing current revenue” to move towards new business models.
“It is encouraging that many are receptive to the idea of open innovation, collaboration and fintech investment, and also are prepared to sacrifice current revenue to move to new business models," said Lumb.
"But banks need to innovate faster, become more nimble and develop a more entrepreneurial culture if they are going to compete effectively and meet customers' needs.”