The UBS Evidence Lab surveyed 61 banks to gauge the objectives, targets and expectations of management of fintech.
The study shows impact (both negative and positive) of fintech on revenues net of cost benefits is estimated at 3.8 per cent over the next three years.
However, the effect is more pronounced in emerging markets where boost to revenues is projected to be 5.1 per cent. In developed markets, the boost to revenues is only 1.3 per cent.
The UBS survey found that 38 per cent of bank management respondents currently have a partnership with a fintech company offering a service other than mobile banking.
This is expected to rise to 51 per cent in the next 12 months.
UBS said investment in fintech has boomed in recent years, with more than US$50 billion invested in the sector since 2010 – including US$22 billion of investments in 2015 alone, according to an Accenture report.
“As the so-called ‘fourth industrial revolution’ approaches, the pace of growth in fintech investments shows no signs of abating, with the emergence of new areas of fintech innovation, from blockchain and smart contracts to robotics, artificial intelligence and the internet of things,” UBS said.
“Against a backdrop of rapid change, banks cannot afford to stand still and do nothing.
“Players that are quick to embrace innovation and digitalisation, possibly via partnerships and collaboration, will be well-placed to maximise opportunities to improve revenues and efficiency while mitigating disruptive pressures.
“In contrast, banks that are slow to adapt and invest are at risk of losing their competitive strength, market positioning and ultimately their earnings power.”
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