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Payment companies fear to lose business to fintech: PwC survey
PricewaterhouseCoopers report based on a survey has revealed that payments sectors are active in acquiring fintech startups and launching their own subsidiaries in a concern to lose parts of their business to fintech.
The report titled “Payments in the Wild Tech World – Digitization and changing customer expectations” is a part of the 2016 PwC Global FinTech Survey. The survey recorded the responses of 24 respondents from payments companies around the globe.
According to the official release, in the survey, 28% of payments companies believe that more than a quarter of their business operations could be lost to fintech by the year 2020. The survey stated that 84% have already placed fintech at the heart of their strategy, 35% have launched their own fintech subsidiaries, while 4% has not yet engaged with fintech. As a result, many payment companies are investing heavily in cybersecurity and fraud protection.
“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,” Manoj Kashyap, PwC’s global fintech leader said.
The survey also revealed that with an influence of mobile apps outside financial services, consumers continue to demand faster and easier payments. 74% of payment companies, being the highest of all financial sector institutions, see this as a threat. 61% of respondents say that customer churn is also a serious concern for the industry and 52% fear losing market share to new players.
PwC also estimates that there will be a growth in the number of non-cash transactions by 69% from 2013 to 2020, representing over one million transactions happening every minute.
“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,” Manoj added.