Fintech rewards on offer for banks but risks rising

Fintech rewards on offer for banks but risks rising

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Fintech is set to bolster bank balance sheets over the next three years, according to analysts at UBS, despite its disruptive effects.

A survey by the firm shows developed market banks expect a 1.3% revenue uplift by 2019 while their emerging market counterparts predict a 5.1% boost by 2019.

However, UBS’s London-based global banks strategist Philip Finch says the disruption and disintermediation risk from new players is “real and growing”.

“The use of financial services from non-traditional providers is set to rise sharply," he wrote in a note to clients.

“In applications ranging from mobile payments to overseas money transfers, from P2P lending to robo-advisers, our survey indicates that adoption is set to surge by 47-150% over the next 12 months.”

A PwC report earlier this year described disintermediation as fintech’s biggest weapon.

The study predicted consumer banking and fund transfer and payments as the sectors most likely to be disrupted over the next five years.

Against this backdrop of rapid change, UBS’ Finch says there are opportunities for banks to improve revenues and efficiency while mitigating disruptive pressures.

“According to our bank management survey, 38% of respondent banks already have a FinTech partnership, a level that looks likely to rise to 51% over the next year."

He added although only 8% of banks have adopted blockchain technology, 19% are at the test/pilot stage, a trend that is led by banks in developed markets (33%).

MUFG, SocGen, ING, Resona, Swedbank in developed countries were all tipped as fintech plays by Finch.

He also rates Sberbank, Pekao, FirstRand, OCBC and BZWBK in emerging markets.


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