More UK financial institutions are targeting acquisitions and partnerships with fintech firms to boost their position in the post-pandemic market, according to a report from Lloyds Bank.
Lloyds Bank’s sixth annual Financial Institutions Sentiment Survey found that more than two fifths (46%) of financial services firms plan to extend their relationships with fintech firms in the next year, compared with a third (32%) in 2020.
Developing new products and services (66%) was the biggest driver of firms’ fintech plans, followed by improving client experiences (53%) and driving growth (49%).
Steve Everett, head of payments and receivables, client products at Lloyds Bank Commercial Banking, comments: “The UK has one of the most vibrant fintech communities in the world. They are at the forefront of innovation within financial services and, by partnering with them, the UK’s largest firms are showing they are committed to developing new products and services to meet changing client needs through collaboration.”
Three quarters of (77%) senior leaders within UK financial institutions also said technology, automation and digital investment is a top strategic priority for the year ahead.
More firms expect to grow investment in their technology systems and core platforms over the next 12 months (77%) compared to last year (62%), with the aim of improving client experience (71%), driving growth (60%) and boosting productivity (59%).
Firms said their top technology investment priorities are the cloud (83%), APIs (77%) and data science, including machine learning and artificial intelligence (69%).
More than a third (37%) of firms are also prioritising investment in blockchain, up from a quarter (27%) in 2020, suggesting more institutions are considering the applications of emerging technology after pausing plans at the height of the pandemic.
Adrian Walkling, head of financial services at Lloyds Bank Commercial Banking, says: “UK financial services firms did not pause technology investment last year when the sector was navigating a significant period of disruption. They still, however, had to allocate significant resource to ensure all of their employees could continue delivering for clients at home.
“The pandemic is not over, but firms are now in a position to focus the lion’s share of their investment on growth and supporting clients, and it’s great to see they plan to do so using both established and emerging technologies.”