MANAMA: As emerging technologies disrupt traditional financial services value chains, many institutions are lagging in implementing effective strategies, according to a new report from KPMG.
The report titled ‘Forging the future: How financial institutions are embracing FinTech to evolve and grow’ found that banks, insurers and asset management companies believe technologies like artificial intelligence, blockchain and the Internet of things are redefining the very nature of financial services.
Fifty-seven per cent of respondents believe ‘emerging financial technologies’ are the greatest source of disruption today, followed by ‘growing global regulatory uncertainty’ at 51pc and ‘new business models’ at 46pc.
KPMG in Bahrain partner and head of financial services Jalil Al Aali said, “The financial services sector in Bahrain and the region is gradually shifting towards digitalisation.
“Emerging technologies combined with changing customers’ preferences are redefining how financial institutions deliver services to enhance their customers experience and stay competitive. I am seeing many banks are still facing challenges with implementing their own FinTech strategy.”
Only 46pc of respondents say their institution has a clear FinTech strategy in place, with 42pc indicating a strategy is in development and 10pc having no strategy at all.
Of those with a strategy, only 47pc believe it is well aligned with the challenges posed by FinTech.
Over 70pc of financial institution respondents ranked “enhancing customer service” as a top objective for their FinTech strategy.
“Transforming existing capabilities” was second, with 48pc identifying it as a key objective.
Overall, 61pc of respondents say their institutions have taken a partnering approach to fintech in the past, while 81pc plan to partner going forward.
Seventy-two percent of respondents believe start-ups will be the main source of FinTech innovation over the next three years, so it is not surprising that 81pc say their institutions are currently partnering with start-ups or plan to in the next 12 months.
A similarly high percentage – 78pc – say their institutions are, or will be, partnering with other large non-financial institutions.
Looking at financial technologies over the next three years, survey respondents expressed the greatest interest in big data and analytics and application programme interfaces – with 67pc and 55pc respectively ranking them first or second in interest.