Banking / Finance

Fintech Start-Ups: Threat or Innovation Partners?

04th Oct `15, 03:36 PM in Banking / Finance

The surge in innovative start-ups in retail banking has grabbed the headlines over the past several years. Until…

BDMS
Guest Contributor
 

The surge in innovative start-ups in retail banking has grabbed the headlines over the past several years. Until recently, the focus has been on those start-ups that were competing directly with banks for customers. Today, however, a broader category of fintech players has become more prevalent – start-ups that are being financed or are partnering with traditional banking organizations to improve the overall consumer experience.

According to the 7th Annual Innovation in Retail Banking Report from Efma and Infosys Finacle, the highest perceived threat to banking is from tech companies like Google and Apple, seen as a high or very high threat by 45% of banks. The second highest threat is perceived to come from start-ups (41% of banks regard the threat as high or very high), even though even the largest of these firms still lack significant scale.

So, while the banking industry overall perceives that the threat of industry disruption in retail banking as growing – 72% regard the threat as high or very high from at least one group of potential competitors – some firms are looking to these same new fintech start-ups as a way to enhance products and services, reduce costs and/or expand market share. The 60-page Efma study also found the banking industry responding to these new threats by increasing investment in innovation.

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