Fintechs, neobanks expected to rapidly chip away at incumbent dominance – Future of Financial Services, Sydney delegate poll
Representatives from established financial firms have conceded neobanks and fintechs challengers will continue to capture market share from the dominant incumbents, with surveyed delegates at the Future of Financial Services, Sydney last week acknowledging the tenuous hold FSIs have over their existing customer base as well as increasing brand disloyalty among customers.
More than 950 delegates from Australia and the Asia Pacific’s leading financial firms attended the two-day event, with polled delegates singling out key industry trends and persistent concerns among industry executives, including growing brand agnosticism among customers, fears over the integrity and quality of in-house data stocks, and the considerable investments made in implementing post-Hayne regulatory changes.
More than a third (36 per cent) of surveyed delegates believe neo and fintech challengers will increase their market share within the next two to three years, with just 12 per cent saying they are confident traditional players will maintain their dominance.
By contrast, last year’s poll revealed less than one in 10 (9 per cent) of those surveyed believed challenger and neobank rivals had any chance of upending the big four.
The long-anticipated ‘bigtech’ surge – with the likes of Apple, Google, and Facebook seen to have designs on the industry – is expected to be some years off, if it happens at all, with just 15 per cent of polled delegates believing consumers will switch their trust towards the tech giants.
While data and AI capabilities were rated by a plurality (43 per cent) of industry delegates as the biggest technology growth opportunity for FSIs over the next year – easily beating out Open APIs (28 per cent), process automation (17 per cent), and cloud (9 per cent) in the poll – attendees also underscored the lack of opportunities to exploit their existing data resources, citing the poor quality of data at hand.
Upwards of 40 per cent of polled delegates believed data quality, or indeed the lack thereof, remained the most significant hurdle to delivering actionable insights from their analytics, with 21 per cent stating they lack the resources to properly access and utilise their data assets – further indicating the industry's persistent struggle to source qualified data scientists and analysts. By contrast, just one in 10 delegates were as yet unable to find a compelling use case for analytics.
The impact of Hayne on FSIs’ technology agendas has been considerable. More than a third (36 per cent) of polled delegates said they have had to make significant post-Royal Commission technology investments as well as extensive changes to their business models to align with a changing regulatory framework. By contrast, fewer than one in ten representatives (9 per cent) said Hayne had no impact on their current policies.
True omnichannel customer experiences have long stood as the proverbial pot of gold at the end of the rainbow for FSIs. This year proves no exception. A clear majority (59 per cent) rated FSIs’ ability to deliver a ‘single view of customer interactions’ across their service channels as their biggest customer interaction challenge. The ability to deliver a competitive advantage through hyper-personalisation, with the industry’s increasing investment in data processing and analysis, appears slightly less of a challenge for today's financial firms, with 23 per cent rating it as their top bugbear.
The 2019 Future of Financial Services, Sydney conference was held on the 14-15 November at the Hyatt Regency, attended by executives, technology, digital and CX chiefs, and ICT managers from across the financial services industry.