Financial technology startups, commonly known as fintechs, will be responsible for 72 per cent of financial innovations in the next three years, a new industry report shows.
This is as a result of a rise in emerging technologies and crypto currencies that pose a threat on operations and efficient service delivery to the sector.
The report by KPMG illustrate that 57 per cent of financial institutions are of the view that fintech is the greatest source of disruption.
While this is a threat to traditional banking practices and even jobs in the near future, 81 per cent of financial institutions said they are currently partnering with start-ups or intend to in the next 12 months.
According to the industry leaders, institutions that do not embrace technology innovations will be faced out and replaced with those driving down the digitial transformation road. The new findings come as industry leaders met on Wednesday this week to discuss fintech trends and experience first-hand industry case studies from sector experts.
They outlined that current technology giants, people within the company, financial institutions both competitors and non-competitors, will be the other sources of innovations in the financial industry.
This forecast comes on the back of the survey held in 36 countries which revealed that over half of financial institutions – 54 per cent - do not have a fintech strategy.
Of those with a strategy, only 47 per cent believe it is well aligned with the challenges posed by fintech.
“Emerging technologies disrupt traditional financial services value chains, there is a need for institutions to hasten implementation of effective strategies,” Gerald Kasimu, KPMG East Africa’s Head of Advisory said in a statement to the Star.
According to the expert, banks, insurers and asset management companies also believe technologies like artificial intelligence, block chain and the internet of things are redefining the very nature of financial services.
Other technology solutions in the forecasted period include data analytics, application programming interface, API technologies and robotic advisors.
“Partnering with fintech firms provides institutions with agility and speed to market. It really is an intuitive way to leverage the new wave of technology that is available to financial institutions. What may be a challenge is understanding the fintech landscape and finding the right fintech partner for a given firm and a given pain point,” fintech lead at Matchi Sashreka Pillay said.
Matchi, is a global fintech innovation and matchmaking platform that connects financial institutions with leading-edge fintech solutions and companies worldwide. It was acquired by KPMG in 2017.