Payments companies are most active in purchasing fintech startups and launching their own subsidiaries as they fear losing parts of their business to fintech, according to a report by PricewaterhouseCoopers (PwC).
The report, titled ‘Payments in the Wild Tech World – Digitisation and changing customer expectations’, revealed that nine out of 10 payments firms believe over a quarter of their operations could be lost to fintechs by 2020.
Nearly 84% of firms have placed fintech at the heart of their strategy and 35% have introduced their own fintech divisions, while only 4% have not yet dealt with fintech.
The study added that with an influence of mobile apps outside of financial services, consumers continue to demand faster and easier payments. Nearly 74% of respondents see this as a threat, 61% say that customers churn is a serious concern for the industry and 52% fear losing market share to new players.
It is also estimated that the number of non-cash transactions will increase by 69% from 2013 to 2020, which will represent over one million transactions happening every minute.
PwC global fintech leader Manoj Kashyap said: “Cybersecurity is certainly an area where traditional payments companies see the most potential to add value and compete with new entrants. They know that, due to the rigid regulatory landscape and expensive licensing required in the financial sector, new entrants still need to cooperate and co-exist with existing players.
“Despite major potential disruptions, the constant growth of the sector will reward those payments players that possess the capacity to understand the changes in customer needs and to deliver prompt and innovative responses to shifting market expectations.”