Non-traditional FinTech services gain traction

Half of banking customers worldwide, including 42.8% in Australia, are using at least one non-traditional FinTech service.

This is among the key findings of the first World FinTech Report, conducted by Capgemini and LinkedIn in collaboration with Efma. The report launched in Australia today.

FinTechs — defined as start-ups that are less than five years old and have a small but fast-growing audience — are particularly popular among younger, tech-savvy and affluent customers, the report shows.

Because many FinTechs specialise in niche services, the report found that nearly half (46.2%) of customers worldwide are using services from more than three FinTech providers.

But despite the growing momentum behind FinTech adoption, overall customer trust levels in these providers remain low. Only 23.6% of customers say they trust their FinTech provider, compared to 36.6% for traditional banks and other financial companies.

Traditional banks are meanwhile responding to the challenge and pursuing FinTech initiatives of their own, and adopting new technologies including big data and analytics, IoT, blockchain, process automation and open API technologies for this purpose.

But less than half (44%) of executives from traditional financial institutions are confident in their FinTech strategy, 40.3% say their corporate culture is not conducive to innovation and only around a third have a well-structured or proactive innovation strategy in place.

“We’re witnessing similar patterns locally, with local FinTech organisations able to attract substantial private investment whilst we also see strong institutional appetite from banks looking to take equity in start-up FinTech businesses with promising solutions,” commented Philip Gomm, industry practice leader for banking and capital markets at Capgemini Australia.

“Successful FinTech providers are thus positioning to supply transformational capabilities that empower traditional organisations to disrupt the disruptors, focused on customer moments of truth that are not delivering all that we expect.”

Image courtesy of Vodafone Medien under CC