Financial services firms fear revenue is at risk from fintech

According to a new PwC report ‘Redrawing the lines: Fintech’s growing influence on Financial Services’, 47% of UK financial services firms plan fintech acquisitions in the next three to five years.

A further 81% said they planned to initiate strategic partnerships with fintech firms over the same period.

Steve Davies, EMEA (Europe, Middle East and Africa) fintech leader at PwC, said that the financial services industry had embraced fintech to help drive change and innovation.

He also claimed that the UK’s financial services sector seemed to have a realistic understanding of the long-term returns on targeted investments.

This was reflected in the report with UK firms expecting an annual return on investment (ROI) of 13%, compared with firms in the rest of the world, who expected an average ROI of 20%.

However, UK firms dedicated only 9% of their annual turnover to fintech and IT projects, well below the global average of 15%.

“Managing expectations around returns is important, particularly for firms facing significant cost pressures,” Steve added.

“Embracing fintech is as much about different ways of working and problem solving as it is about deploying new technology.”

Over three-quarters (77%) of UK financial services firms reported that they plan to invest in data analytics in the coming year and 39% plan to invest in cyber security.

Steve concluded that a sustained focus on innovation is much needed, which can only be a good thing for customers and firms.