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Within 10 years, 20% of consumers will trust technology firms to supply of all types of financial products and services as fintech moves from peripheral to all-encompassing banking services.
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This represents a major transformation from tech companies currently being viewed as financial information providers and niche financial product and service suppliers.
The prediction comes in research from peer-to-peer money transfer firm TransferWise, which surveyed 9,000 people in Europe, Asia Pacific and North America.
The research revealed that 69% of consumers had not yet used a technology company for a financial service, but in five years’ time, about 48% of consumers will use a technology supplier for at least one financial service and 32% expect to use a technology provider for at least half of their financial needs.
Taavet Hinrikus, CEO at TransferWise, said fintech is on the cusp of becoming a mainstream consumer trend. “Although its impact on the industry is yet to be truly felt, expectations are high,” he added.
But Hinrikus pointed out that finance is one of the hardest sectors to disrupt. “One of the main reasons for this is trust,” he said. “The relationship we have with our banks is unlike one we have with any other service provider. Usually long-term, often for life, we remain faithful, no matter what.
“Most of us don’t question what a bank does. They make it hard for people to access money. Even though it’s our money, they treat it as theirs.”
The figures from TransferWise suggest that change is coming. Niche areas of financial services have seen early success, which has encouraged startups.
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Peer-to-peer lending is one such area which is already approaching the mainstream. Peer-to-peer lending platforms offer an alternative to banks, with investors providing capital and online IT platforms matching lenders with borrowers.
The IT platform quickly assesses the risk of loans and calculates fees, with borrowers avoiding the often high interest rates of bank lending.
The Peer-to-Peer Finance Association (P2PFA) said the sector in the UK has doubled in size since the end of 2013, with a total of more than £2.1bn lent. The organisation also said the number of lenders had increased by one-third and the number of borrowers was up 90%.
In a report last year, Robert Wardrop, executive director of the Centre for Alternative Finance at Cambridge Judge Business School, said: “Alternative finance, at least in some European countries, is on the cusp of becoming mainstream.”
The UK has a growing group of alternatives to banks, including challenger banks that differentiate through their use of technology. ...................................