Friday 14 December 2018

Jalil Al Aali

Firms ‘lagging in effective fintech strategies’

MANAMA, November 8, 2017

As emerging technologies such as fintech disrupt traditional financial services value chains, many institutions are lagging in implementing effective strategies, said a new report from KPMG, a provider of audit, tax and advisory services.

Banks, insurers and asset management companies believe technologies like artificial intelligence, blockchain and the internet of things are redefining the very nature of financial services, added the report titled “Forging the future: how financial institutions are embracing fintech to evolve and grow”.

Fifty-seven per cent of respondents believe ‘emerging financial technologies’ are the greatest source of disruption today, followed by ‘growing global regulatory uncertainty’ at 51 per cent and ‘new business models’ at 46 per cent.

Jalil Al Aali, partner and head of Financial Services at KPMG in Bahrain said: “The financial services sector in the Kingdom of Bahrain and the region is gradually shifting towards digitalization.

“Emerging technologies combined with the changing customers’ preferences are redefining how financial institutions deliver services to enhance their customers experience and stay competitive. I am seeing many banks are still facing challenges with implementing their own fintech strategy, this survey provides comprehensive insight on those challenges faced worldwide.”

Fintech strategy challenges

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

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

Partnering imperative

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

Seventy-two per cent of respondents believe fintech start-ups will be the main source of fintech innovation over the next three years, so it is not surprising that81 per cent say their institutions are currently partnering with start-ups or plan to in the next 12 months.  Interestingly, a similarly high percentage – 78 per cent – say their institutions are, or will be, partnering with other large non-financial institutions.

Looking at financial technologies over the next 3 years, survey respondents expressed the greatest interest in big data and analytics and Application Program Interfaces (APIs) - with 67 per cent and 55 per cent respectively ranking them first or second in interest. – TradeArabia News Service

Tags: KPMG | Fintech |

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