Incumbents Must Embrace Fintech Startups to Thrive in New Era of Banking

Canada’s Big Six banks performed well last year, a new report from PwC shows, but will have to step their game up in 2017 as financial technology startups flood the market with new innovation.

“Industry changes, shifting customer expectations, rising costs and a rapidly shifting technological landscape continue to challenge the traditional banking model,” the report, titled “Canadian Banks 2017,” reads. “FinTech startups, technology giants and other non-traditional players continue to make inroads in the marketplace. And Canada’s payments infrastructure is embarking on its largest overhaul
in decades.”

It’s not just a concern for Canadian incumbents, however. 70% of CEOs globally cite “speed of technological change” as a threat they’re concerned about, 65% are concerned about “changing consumer behavior.”

“In response to the growing digital needs of customers, banks are investing in developing better services and experiences to reduce customer friction,” goes the report. “As aging legacy systems challenge banks’ agility, they’re making significant investments to modernize the core technologies at the heart of their institutions.”

The key, according to the report, is for banks to look at fintech startups not as challengers to defeat, but allies to collaborate with.

“Working with FinTechs provides opportunities for banks to embrace new technology and to interact with customers in new ways. Our report shows that banks are increasingly innovating, modernizing, and reinventing themselves to better address a rapidly changing environment, and shifting consumer behaviour, making themselves even more competitive globally and putting the customer first,” says Diane Kazarian, National Financial Services Leader, PwC Canada. “2017 will be an exciting year for this sector.”

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