Payments, lending and foreign exchange have been the battlegrounds for financial institution digitisation since the early 2000s and we are now at a point where all three products are unrecognisable from where they were at the turn of the century in terms of execution and interface, particularly for customers. These products make up a very small part of corporate treasurers’ banking needs indicating huge potential opportunities for providers to fill the gaps still remaining. Given the cost and time associated with technology upgrades and product development, the most pressing questions for financial institutions remain: what areas offer most opportunity, is it best to collaborate or conquer and what, if any, is the revenue upside?
Fintech start-ups and vendors were originally positioned as an alternative to banks, a provider that would add value by removing the cumbersome financial institution from the process. Over the last few years there has been a shift towards a more collaborative approach with fintech vendors and FIs partnering together to leverage the others strengths however according to global corporates, banks should be a little more worried about their future positioning. Three quarters of large, global businesses see fintech companies taking market share from incumbent financial suppliers over the next five years. This view is even more aggressive among China, Hong Kong, Singapore and UK based businesses with 90 percent of treasurers in these regions forecasting a loss of market share from incumbent FIs at the hands of fintech start-ups and vendors over the coming five years.
Conversely, the future is brighter for FIs across Australia, France and the US. Between 20-30 percent of businesses in those markets forecast that technology advancements from fintech companies will work as catalysts for improvement and/or fintechs will be acquired by the banks rather than achieve any cut through on their own. These three markets are also the most dismissive of the future impact of fintech companies with 10-20 percent of corporates reporting they will not be as impactful as originally thought, in any form.
The reason over three in four global corporates see fintech companies gaining market share? Because financial technology is making it easier to run their businesses and banks are somewhat lacking in their ability to keep up with innovation in the eyes of the corporate treasurer. The Asia markets of China, Singapore and Hong Kong report fintech solutions as having a highly positive effect on the ease with which they run their business. The manufacturing and Non-Bank FI sectors also report the highest impact of fintech in regard to making their businesses easier to run.
Despite the many high-profile concepts and product roll outs from banks, global treasurers have a decidedly average view on if banks are keeping up with new financial technology or not. Across all markets covered and all industries, treasurers are relatively unimpressed with bank efforts. Practical solutions that can be applied to solve quick pain points are needed but where are banks to start?
- Financial Technology in Corporate Banking
- Leaders and Laggards: what markets are leading the way?
- 93 percent of large Singapore-based corporates use a non-bank fintech provider
- Equity investments big among Asia corporates
- Opportunities and Barriers
- Risk, compliance and regtech
- Counterparty risk and other barriers
- If corporates could talk to their banks
- What do businesses want?
- The positives of digitisation outweigh the negatives
- Detailed Data Tables
- Proportion of new business investment allocated to Fintech development
- Role of Fintech companies over next 5 years
- Areas of improvement through technology
- Business banking needs currently met by non-bank Fintech providers
- Trust in fintech providers for TB / Cash Management
- Key regulatory / compliance needs best addressed by regtech
- Biggest barriers / hurdles for Fintech companies in commercial banking
- Interest in non-operational equity investment
- Is Fintech making it easier to run your business?
- Negatively impacted business elements due to Fintech / digitisation
- Mind share in global Fintech brands
- Most important Fintech technologies
- Customer churn due to new Fintech solutions
- Are banks keeping up with new Fintech innovations?
- Country with the greatest Fintech innovations