While traditional financial services firms are waxing lyrical about the benefits of fintech only a third (34%) have a C-suite executive leading technology/digital strategies.
This is according to a survey of 248 finance firms, of which 73% have annual revenue over $1bn. The Crossing the Lines survey report from PwC said that UK financial services firms were lagging the rest of the world in putting a C-Level executive in charge of technology. I the rest of the world 41% of financial services firms have already done so, revealed the survey.
This needs to be addressed if traditional firms are going to close the tech gap between them and digital native challengers, according to Rav Hayer, UK fintech leader at PwC. “Increased C-Suite involvement will pave the way for more investment and bring a more attractive environment for real innovation and partnership with fintechs, helping to bridge the gap with challenger banks for example,” he said.
These individuals will have to approach the challenge on two fronts with technology needed for operational efficiency as well as customer services. According to the PwC survey 44% of UK finance firms have already embedded fintech into their strategic operating model and over a quarter have incorporated emerging tech into the products and services they sell.
“The focus to date has been on incorporating emerging tech across payments, personal finance and insurance where 49%, 37% and 32% of respondents reporting emerging tech as already being incorporated,” said Hayer.
He added that the next two years will see asset and wealth management businesses will focus heavily on fintech.
But there are major challenges for large firms, when they adopt fintech. According to the survey findings the biggest challenges for traditional finance firms adopting fintech were: Security, compliance and data-privacy risks; too many legacy systems with new systems risking adding complexity; and regulation.
Another challenge facing firms,con the back of fintech adoption, is the need for new skills to support fintech based business models. As a result of the adoption of the latest technologies financial services firms are creating new jobs. In fact, according to the survey, 63% of UK financial services firms said they are creating more jobs as a result of fintech. But 46% of UK firms are struggling to fill the roles created.
The survey revealed that those leading technology at financial services firms are currently engaged in cloud, big data and robotic process automation (RPA) projects. “Our research suggests that priority areas of focus over the next 12 months will be cloud, big data, and RPA, which aligns to the increasing focus on the power of data and the need for scalable computing, data storage and network capabilities to unlock this.”
Globally, artificial intelligence technology is expected to transform the industry in the next two years according to 56% of financial services firms. The next most likely is big data with 44% expecting this, closely followed by cloud computing with 43%. Blockchain 40%, 5G 39% and IoT 36% were also cited as transformational technologies for the finance sector.