Beancounters at PriceWaterhouseCoopers have added up some numbers and divided by their collective shoe size and decided that the finance industry is about to get a big kicking from FinTech outfits.
Of the more than 1300 financial industry executives polled by the professional services firm, 88 percent said they feared their business was at risk to standalone financial technology companies in areas such as payments, money transfers and personal finance, the study found.
PwC’s annual Global FinTech Report said that consumer services such as personal loans, were seen as most at risk.
The new companies take advantage of new technologies to offer better digital services to customers, in areas ranging from financial advice to life insurance.
To counter the threat, financial institutions expected to increase their collaboration with fintech companies, with 82 percent of respondents saying partnerships with tech-savvy firms would increase over the next three to five years, the PwC report found.
To improve their digital offering and remain competitive, large firms have been looking to work more closely with young technology companies through a number of initiatives such as corporate venture arms and innovation centers.
In his annual shareholder letter published on Tuesday, JPMorgan Chase & Co chief executive Jamie Dimon highlighted some of the bank’s most recent collaborations with fintech companies in areas including mortgages, small business lending and payments.
While collaboration is on the rise, entrepreneurs and executives often note that several hurdles are hindering more effective cooperation. IT security, regulatory uncertainty and differences in management and culture, were cited by respondents to PwC’s report as major challenges hindering partnerships.
While adoption of the nascent technology is not expected to happen quickly, the survey found 55 percent of respondents planned to adopt it by next year, and 77 percent by 2020.