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Forging the Future: KPMG global fintech report

Fintech seen as the biggest disruptor for financial institutions

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As emerging technologies disrupt traditional financial services value chains, many institutions are lagging in implementing effective strategies, according to Forging the future: how financial institutions are embracing fintech to evolve and grow – a new report from KPMG that surveys more than 160 financial institutions in 36 countries.

Fintech strategy challenges
Addressing the organizational response to fintech is proving challenging to many institutions. Only 46 percent of respondents say their institution has a clear fintech strategy in place, with 42 percent indicating a strategy is in development and 10 percent having no fintech strategy at all. Of those with a strategy, only 47 percent believe it is well aligned with the challenges posed by fintech.

Over 70 percent of financial institution respondents ranked ‘enhancing customer service’ as a top objective for their fintech strategy. ‘Transforming existing capabilities’ was second with 48 percent identifying it as a key objective.

Partnering imperative
Partnering, particularly with start-ups, is driving fintech activity, according to the survey. Overall, 61 percent of respondents say their institutions have taken a partnering approach to fintech in the past, while 81 percent plan to partner going forward.

72 percent of respondents believe fintech start-ups will be the main source of fintech innovation over the next three years, so it is not surprising that 81 percent say their institutions are currently partnering with start-ups or plan to in the next 12 months.

Interestingly, a similarly high percentage – 76 percent – say their institutions are, or will be, partnering with other large non-financial institutions.

“This approach is being driven by the growing recognition of the need to get to a dominant scale position quickly in particular segments. At the same time, half of respondents say they will employ a ‘build’ strategy – reflecting the plans of many banks and other institutions to build and launch their own fintech services. Fintech is not the exclusive domain of start-ups and the survey results indicate that institutions also see themselves as being able to launch their own fintech products and services in certain areas.” Ian Pollari, Global Co-Leader of Fintech, KPMG International

Looking at financial technologies over the next three years, survey respondents expressed the greatest interest in big data and analytics and Application Program Interfaces (APIs) - with 67 percent and 55 percent respectively ranking them first or second in interest.

Download the full report here: Forging the future: how financial institutions are embracing fintech to evolve and grow.

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