View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
  2. Cloud
August 22, 2017updated 23 Aug 2017 5:08pm

World Economic Forum: AWS & Facebook a bigger threat to banks than fintech startups

A growing reliance upon large tech vendors could hurt financial institutions.

By James Nunns

Banks may have been told for the past few years that fintechs are coming to steal their business, but it’s actually the tech giants they should be fearful of.

The likes of Amazon, Google, and Facebook are greater threats to banks’ traditional lines of business as fintechs have failed to disrupt the competitive landscape.

That’s according to a World Economic Forum (WEF) report, Beyond Fintech: ‘A Pragmatic Assessment Of Disruptive Potential In Financial Services,’ which found that although fintechs may have changed how financial services are structured, provisioned, and consumed, they have not managed to successfully establish themselves as dominant players.

The report said that fintechs did manage to seize the initiative and define the direction, shape and pace of innovation, and had also reshaped customer expectations, however, the high cost of switching, and with new innovations not being sufficiently material to warrant the shift, the shift away from incumbents has been overestimated.

Read more: Level39 CEO: Giving startups David’s agility and Goliath’s strength

The report also states that fintechs have struggled to create new infrastructure and establish new financial services ecosystems.

For financial organisations, there have been opportunities created from the rise of fintechs, but the report highlights that these institutions are increasingly dependent on large tech firms to acquire critical infrastructure and differentiating technologies.

For fintechs, the report says that they have opportunities to work with large tech WEFcompanies that could broaden their reach, whilst they may also be attractive targets for incumbents seeking to acquire technical talent.

Content from our partners
Green for go: Transforming trade in the UK
Manufacturers are switching to personalised customer experience amid fierce competition
How many ends in end-to-end service orchestration?

Tech vendor’s impact on regulators will raise questions as to how large tech companies are treated under traditional regulatory frameworks, this, the report says, will have a “large impact on their interactions with financial institutions.”

Read more: Huge gender pay gap in cloud computing revealed

WEF said that financial institutions will need to find ways to partner with the large techs without losing their core value proposition, but due to all firms risking becoming dependent on large techs, this will necessitate the loss of some control over both costs and data.

For incumbents, they will have to compete with techs for talent, which could drive up the cost of technology talent. They also run the risk of falling behind on new tech offerings if they minimise their engagement with the large tech vendors.

The full report can be found here.

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU