Almost 90% of payments companies fear that more than a quarter of their operations could be lost to fintechs by 2020, according to a new PwC study.
PwC’s 2016 Global FinTech Survey found that to mitigate this risk, 84% of payments companies have prioritised fintech in their business strategy and 35% have launched their own fintech subsidiaries. To date, only 4% have not yet dealt with fintech.
Around 74% payments companies identified consumers’ desire for faster and easier payments as a threat, the highest percentage of all financial sector institutions. Customer churn was also a serious concern for 61% of respondents, while more than half of the respondents said they feared losing market share to new players.
PwC estimates that the number of non-cash transactions will grow by 69% from 2013 to 2020, representing over one million transactions happening every minute. To ensure that these electronic payments remain secure, many payments companies are prioritising investments in cyber security and fraud protection.
“Cyber security is certainly an area where traditional payments companies see the
most potential to add value and compete with new entrants,” said Manoj Kashyap, PwC’s global fintech leader. “They know that, due to the rigid regulatory landscape and expensive licensing required in the financial sector, new entrants still need to cooperate and co-exist with existing players. Despite major potential disruptions, the constant growth of the sector will reward those payments players that possess the capacity to understand the changes in customer needs and to deliver prompt and innovative responses to shifting market
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