FINANCIAL TECHNOLOGY | Staff Reporter, Singapore

4 in 5 financial institutions in Singapore fear losing revenue to fintechs

Nine in 10 plan to increase fintech partnerships over the next 3-5 years.

A large majority (82%) of global banks, insurers and investment managers intend to increase their partnerships with FinTech companies over the next three to five years. Singapore respondents indicated a similar sentiment with almost 9 out of 10 respondents (89%) planning to increase FinTech partnerships, according to a new PwC report Redrawing the lines: FinTech’s growing influence on Financial Services.

Antony Eldridge, FinTech and Financial Services Leader, PwC Singapore comments:

“In Singapore, we have seen established financial institutions investing in innovation for some time now. What is unique in Singapore is the regulator’s progressive approach which is helping to nurture FinTech growth by providing a conducive ecosystem. The introduction of regulatory sandboxes is a prime example of how the regulators here are creating an environment where new technologies can be experimented while minimising risks to consumers."

"The results indicate that there is real room for growth in Singapore’s FinTech ecosystem, which comes at a good time as we are also noticing a growing acceptance of non-traditional FinTech solutions by consumers. That, in turn, is driving FinTech solutions to grow beyond low value, high volume to address more advanced and complex needs of client groups such as in asset and wealth management."

Here's more from PwC:

The report, drawing on a survey of over 1,300 respondents globally, shows clear signs that the international finance industry is getting to grips with innovation. One driving factor behind these partnerships is an increasing fear within the industry that revenue is at risk to standalone FinTechs, with 88% of financial services respondents globally seeing it as a real threat (83% globally in 2016).

Singapore is heading in the same direction with 80% of respondents from financial institutions seeing FinTech as a threat (73% in Singapore in 2016).

As a result, a mutual understanding is emerging between the two parties - partnerships between the two can facilitate more effective innovation than either alone. On one hand, FinTech companies can benefit from financial institutions’ existing processes and infrastructure which would otherwise be too costly for them to undertake on their own.

On the other hand, incumbents can leverage the innovation and new technologies from FinTech players to overcome legacy issues, sharpen operational efficiency and respond to customer demands for more innovative services.

Of the opportunities related to the rise of FinTech, expanding products and services emerged as the number one opportunity in Singapore (60%) and globally (62%). Meanwhile, when it comes to leveraging FinTech to differentiate their business, more local industry players recognise this as an opportunity compared to their global peers (45% Singapore, 29% globally). 

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