Today’s companies are too focused on start-ups at the expense of other potential sources of disruption, according to the New Zealand PwC Global FinTech Report.
The risk highlighted by the report is that the focus on start-ups comes at the expense of other potential sources of disruption. A staggering 100 percent of New Zealand respondents felt that the most disruptive force in financial services in the next five years would be start-ups, compared to a global average of 75 percent.
Compared to our global findings, local companies are overestimating the impact of start-ups and underestimating the disruptive potential of themselves and their competitors.
“This makes me think that in five years we won’t be talking about FinTechs anymore,” says Andy Symons, financial services leader at PwC in a media release.
“The FinTech revolution won’t just be driven by start-ups. It will come from the established competitors you thought you knew, but who are already a step ahead in transforming their businesses to meet changing customer expectations.”
“The distinction we’re now seeing between FinTech start-ups and incumbents is only temporary and will disappear completely as corporates realise their own transformational potential and today’s start-ups mature.
“Where today’s corporates aren’t focusing is on their existing competitors – our global respondents were twice as likely to predict disruption coming from existing financial service institutions as our New Zealand survey participants,” says Symons.
The report finds that financial services companies are relying too heavily on start-ups for innovation with almost 85 percent saying they are entering into partnerships with FinTechs, compared to 45 percent globally.
“The risk that comes with these partnerships is that established firms treat a FinTech partnership as a chance to outsource innovation to a start-up, rather than signaling the beginning of a much wider transformation of their operations,” says Symons.
Today’s corporates will have to look beyond simply partnering with FinTechs and create a two-speed innovation strategy if they want to survive the changes coming.
This will mean bringing together the best of both worlds – the existing expertise within the business; and the innovation, creativity and digitally enabled business models of today’s start-ups.
The FinTech revolution won’t happen overnight, but it will happen – and companies of every size across financial services have to be ready for it.
The 2017 Global FinTech survey was based on the responses of 1,308 participants, principally chief executive officers (CEOs), directors/department heads, heads of IT/digital/technology, and other top management involved in strategy and innovation from 71 countries and across six regions. Of that global survey pool PWC had 22 New Zealand respondents, split across banks, insurers, asset and wealth managers and FinTech start-ups.
