Traditional financial services firms plan to meet FinTech challenge

The impact of the dramatic rise of digital ‘challenger’ business models throughout the financial services sector has had a direct impact on investment in IT solutions.  Financial services firms boosting IT spend plan to do so by 15 per cent in the next 12 months, with multi-million pound investment programmes implemented to help compete with new FinTech market entrants.

Online investment firms and challenger banks have been identified as the new market entrants to cause the most disruption to traditional financial services firms in the next 12 months. Twenty new challenger banks have lodged applications with the Bank of England in the hope of receiving a banking licence, according to officials.  The growth in new digital platforms has led to a dramatic increase in the ability of smaller players to challenge established providers.  Peer-to-peer lenders and online traders were also cited as potentially the most disruptive new market entrants.

The rapid expansion of the UK FinTech industry is exacerbating the current war for talent.  The vast majority at 91 per cent being financial services, banking and insurance executives are concerned the growth of the FinTech sector will negatively impact their ability to attract skilled professionals with relevant sector experience, including 35 per cent who say they are very concerned.

The research also highlights that 85 per cent of executives in the financial services sector are nervous about their ability to retain their own top performers in the face of new FinTech competition, with almost a third very concerned.  They are also worried that the expansion of FinTech enterprises will impact their ability to maintain or grow market share, with 30 per cent of these professionals extremely anxious.

Luke Davis, vice-president, Robert Half Financial Services UK, said: “Digital transformation plans are ramping up among both the front and corporate offices of financial services firms, largely the result of competition from the FinTech industry. This reaction is seeing established firms review their traditional models to offer customers, clients and employees new services using innovative technologies.

“Financial services professionals with experience of managing digital projects, such as enhancing the customer experience through digital technologies for mobile, tablets and wearable devices are in hot demand, particularly for interim roles, as firms seek to create digital solutions that are both innovative and compliant.”