New research has revealed that more than half of retail banks see tech firms and challenger banks as a “significant” threat to their businesses.
The study, which was conducted by Infosys Finacle and global non-profit organisation Efma, showed that 77% of banks regard the threat from technology companies, start-ups, retailers and/or telecom players as “high or very high.”
More than half of the 158 banks from 56 countries polled currently consider the threat from technology companies and start-up challenger banks as “significant”, according to the Innovation in retail banking study.
The research showed that banks have largely embraced digitisation and are aggressively adopting new technologies in order to innovate.
EdgeVerve Infosys Finacle global head Sanat Rao said: “Changing customer preferences, rapid evolution of technology and pressures from outside of the traditional banking world are accelerating a major transformation of the banking industry.
“The confluence of these forces is putting digitisation at the centre of technology renewal, enabling multi-channel touch-points for superior customer service. From the research findings and customer interactions, it will likely be the development of open API’s, AI and blockchain that shall cause the next big change in banking.”
The proportion of banks opting for an innovative strategy to face the challenge increased to 74% in 2016 compared to just 39% in 2009.
Banks are also found to be more inclined towards collaborating with start-ups in a bid to stay competitive in the changing industry landscape.
Around 73% of the respondents in the survey see collaboration with start-ups as the best way to leverage new technologies.
Efma CEO Vincent Bastid said: “This year’s global banking study shows that banks have resolutely turned to start-ups to drive their own digital transformations.
“However, banks are being held back by old legacy systems and are still divided on where and how much to invest. Banks should think globally and embrace new ways of doing business.”
One of the key findings in the study is that 86% of banks believe that emerging competitors will have a significant impact in the payments segment.
Half of the surveyed banks see legacy technology environments as the biggest barrier to digital transformation.
The study identified advanced analytics and big data as the most disruptive new technology for banks, with 79% of them claiming that it is having a significant impact now or will have within in the next two years.
A fifth of banks in the study are introducing or contemplating launching a digital only bank as a strategy for dealing with digital transformation.
