Banks the world over need to 'think big' to meet evolving customer demands in the digital age, revamping core systems and establishing full competency in API-based software development, says CapGemini in the 2016 edition of its annual World Banking Report.
Fintech providers are making increasingly significant inroads with customers, yet the vast majority of banks admit they are not adequately prepared to manage this emerging threat, says the consultancy.
The report found that nearly two-thirds of the 16,000 retail banking customers polled for the study are now using fintech products or services, and are much more likely to refer friends and family to their fintech provider (55%) than to their bank (38%). Fintech providers are viewed as easy to use and provide a good user experience in contrast to their incumbent banking counterparts.
However, while 96% of banking executives agree that the industry is evolving toward a digital banking ecosystem, where fintech providers play a much bigger role, only 13% say they have the systems in place to support it.
“The inability of banks to innovate leaves the door wide open for fintech providers to attract new customers,” says Anirban Bose, head of global banking and financial services, Capgemini. “There is opportunity for banks to begin working collaboratively with these companies, but they must formulate a rapid response plan to do so before the swiftly evolving bank environment outpaces their window for change.”
In order to respond to the threat these companies pose to more traditional models, nearly two-thirds of bank executives say they need to view fintech firms as partners, with the majority of bank development strategies taking the form of collaboration (46%) and investment (44%). Less than one-fifth (18%) say they plan to acquire fintech firms or their technology.