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FinTech’s fast-growing influence on Financial Services raises concerns

Eighty percent of financial executives believe that business is at risk with 88% being increasingly concerned that they are losing revenue to innovators, according to a PwC global report.

The PwC report was based on a global survey of 1,308 financial services and FinTech executives and includes insights and proprietary data from PwC’s DeNovo platform. According to research from the platform, funding of FinTech startups has increased at a compound annual growth rate of 41% over the last four years.

Financial Institutions are embracing the disruptive nature of FinTech as 77% will increase their internal efforts and integrate. The majority of global financial services companies (82%) plan to increase FinTech partnerships.

Currently, respondents believe their consumers already conduct payments (84%), fund transfers (68%) and personal finance (60%) with FinTech, among other activities. The activities most at risk of moving to FinTech companies over the next five years were payments (68%), personal loans (58%), fund transfers (56%) and wealth management (52%).

According to respondents the opportunities most related to the rise of FinTech were the expansion of products and services (60%) and leveraging existing data and analytics (46%). Of respondents, 77% expect to adopt blockchain as part of their system or process by 2020.

The top three regulatory barriers to innovation were AML/KYC (59%), data storage privacy and protection (56%), and a new business model such as crowdfunding (44%).

When working with FinTech companies the main challenges that respondents faced were regulatory uncertainty (50%), IT security (46%), differences in knowledge or skills (38%) and differences in management and culture (38%). When working with traditional financial companies the key challenges faced are differences in management and culture (64%), regulatory uncertainty (55%), and differences in operational processes (45%).

The full PwC global FinTech report can be found here.

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