Key players in the financial services industry are set on a clear pathway towards collaboration, whether they like it or not, according to a state of the industry report from Barclays Corporate Banking, ‘An ecosystem in transition’.
Research from the bank highlights the contrasting regional views on where innovation is most likely to come from in the next five years, as well as the vastly different approaches to cybersecurity taken by financial services operators from around the globe.
Fintechs and traditional players to join up
As the official insights partner of the Money 20/20 global conference series, Barclays conducted a survey of nearly 2,000 industry leaders from across financial services, at events in Europe, Asia and the US.
From these senior executives, Barclays Corporate Banking found that more than two-thirds (69%) of businesses globally identify collaborating and partnering with fintechs for mutual benefit as the preferred approach for traditional banks in the future, contrary to public perceptions which may still be that established financial institutions see fintech as a threat.
This attitude is particularly strong in Europe (72%), and the US (71%), where the approach from established financial services players is changing towards a clearly stated desire to work together with fintechs.
Where will innovation come from?
According to respondents, China is expected to see the biggest rise in payment innovation in the next five years, with 45% of Asian firms ranking it as the most likely source of future innovation, along with 40% of European firms. Even the US, which was the only region to select itself as the most obvious hotspot for future innovation (selected by 34% of firms), ranked China as the second most probable source (chosen by 25%).
While still in the shadow of China, India ranks in the top three as a future source of payment innovation across all three regions, with 21% voting for it in Asia, 12% in Europe and a further 10% in the US.
Muted confidence on cybersecurity
Global attitudes towards cybersecurity also emerged as an area of focus at Money 20/20. Over half (53%) of all professionals surveyed identified that their companies did not have a robust approach to cybersecurity - yet only 23% of respondents felt that investing further in this area should be a priority. More than a quarter (27%) of respondents also felt that their firms could be doing more to educate colleagues on cybersecurity.
Financial services firms in Asia were the least confident when it came to approaching the issue, with only 37% expressing confidence in their own cybersecurity defences (compared to 54% in Europe and 47% in the US). However, they were also leading global efforts to enhance cybersecurity protections - with over a third (35%) of respondents in Asia seeking to increase education on cybersecurity, and one in four (26%) looking to enhance their investment in this area.
“Our research results reveal the wide range of global trends currently developing within financial services, centred on the idea of transition,” said Phil Bowkley, global head of Financial Institutions Group, Barclays Corporate Banking. “As traditional banks look set to collaborate with fintechs for mutual benefit, and innovation continues to be driven from locations dispersed all over the world, what is clear is that in this fast moving environment successful business models will need to adapt rapidly and reflect regional sentiment and opportunities. Our dedicated global fintech team are ready to embrace this increasingly well-connected ecosystem, and help our clients succeed.”
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