Payments Sector Alert to Fintech Disruption Threat

(Picture: Shutterstock)

(Picture: Shutterstock)

Payments companies are the most concerned of all financial industry players about losing parts of their business to the ubiquitous Fintech competition. So how are they fighting back?

To tackle the ever larger challenge, payment companies have been amongst the most active in acquiring rival fintech startups and launching their own subsidiaries, while also investing heavily in cybersecurity and fraud protection.

Almost nine out of ten payments companies in PwC’s 2016 Global Fintech Survey believe more than a quarter of their operations could be lost to financial technology innovators by 2020.

The Growing Influence of Fintechs

This is the highest percentage of all financial industry players. In response, 84 percent of payments companies have placed fintech at the heart of their strategy and 35 percent have launched their own fintech subsidiaries, while only 4 percent have not yet dealt with Fintech.

Influenced by mobile apps outside of financial services, consumers continue to demand faster and easier payments. As payments become frictionless, incumbents become increasingly concerned about margin pressure. 

One Million Transactions in 60 Seconds

«In China, mobile apps and payments are very popular with consumers. We can see some fintech companies looking at ways to add revenue directly through payment platforms, while there is also value to be gained from gathering consumer data on transactions. This data is being used to inform more targeted financial services and products, such as wealth management or loans. So striking a balance between immediate returns and longer-term loyalty will be an important challenge,» said Chun Yin Cheung, PwC China Fintech Partner.

Cybercrime and Fraud

PwC estimates that the number of non-cash transactions will grow by 69 percent from 2013 to 2020 globally, representing over one million transactions happening every minute. But while the popularity of electronic payments increases, so does cybercrime and fraud.

It’s why payments companies believe the most critical trend impacting the industry is the development of advanced tools and technologies to protect consumers from security attacks and fraud.

The 2016 PwC Global Fintech Survey gathered the views of 544 respondents from 46 countries, principally Chief Executive Officers (CEOs), Heads of Innovation, Chief Information Officers (CIOs) and top management involved in digital and technological transformation, distributed among five regions. 

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