Financial services playing catch up with more disruptive industries - PwC
As technological breakthroughs continue to shape the modern world, the financial services sector is lagging behind other industry sectors, which could dent a potential £100 billion ($130 billion) economic boost to the sector. This is according to professional services firm PwC.
Compared with areas such as hospitality, airlines, transport and home entertainment, the financial services industry is yet to see a new entrant capture significant market share, PwC said.
“While there have been new entrants to financial services sectors, incumbents have generally been able to withstand these challenges and avoid any loss of their customer base,” it said. “In comparison to other industries, most consumers still take a relatively low interest in financial services products and rarely scan the market for new offerings.”
PwC analysis of the consumer-financial services provider relationship revealed that 48 percent of British consumers would not consider purchasing any financial product from a fintech.
PwC said that incumbents are most likely to reap the benefits of disruption due to three key challenges for new entrants: the importance of a trusted brand, high levels of customer inertia, and high acquisition costs.
However, incumbents are unlikely to enjoy the benefits of disruption if they do not work with newer market players.
“To become more agile and responsive to a changing market, incumbents may well seek to address their technology and innovation gaps through acquisitions and partnerships,” said Andrew Kail, head of financial services at PwC. “However, delivering value from these arrangements has proven notoriously difficult for the traditional players."
Alan Gemes, senior partner PwC Strategy&, added: "Any acquisition needs to be managed carefully within the organisation in order to sustain the innovation it brings.
“Nonetheless, making any acquisition or partnership work effectively for both sides is challenging. Many companies may not be fully prepared for the process.”
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