Due to growing concerns of incumbents losing business to a new breed of financial service providers, more than 82% of financial institutions have expressed interest in forming relationships with fintech firms in the next there to five years, according to a PwC report.
Businesses such as commercial banks, insurance firms and financial investors plan to adopt fintech in the coming years in the hope of receiving a rate of return on investment of up to 20%, PwC said in a report entitled "Redrawing the Lines: Fintech's Growing Influence on Financial Services".
The report surveyed more than 1,300 respondents, largely CEOs, department heads, innovation heads and IT chiefs from 71 countries across six regions in a variety of industries, including banking, asset management, fund payments, insurance, reinsurance and fintech.
The DeNovo platform of PwC reported that investors in the past four years have invested up to US$4 billion (135.9 billion baht) in fintech startups worldwide.
Despite 88% of investors acknowledging that fintech's presence among their businesses has been turbulent in the past, survey results have found that more than 1,300 financial investors are still interested in investing in the new technological platform.
Fintech startups must target investors from large financial institutions to form ties while financial investors better their understanding of fintech innovations and disregard outdated forms of customer service.
Manoj Kashyap, global fintech leader and partner with PwC US, said the collaboration of financial institutions with fintech firms and other new technological innovations is an important method of increasing the efficiency of communication between customers and businesses.
Forming such relationships will be the key to allowing financial businesses to outsource R&D to efficiently solve market problems and expedite the creation of new technologies, he said.
Customers who have previously been unable to access their financial statements on-the-go will now be able to use commercial banks' mobile money service, a technology that PwC estimates will bring in revenue of up to $3 million.
Startups that utilise AI technologies will receive the most funding, with more than $1 billion invested in AI technology a year for the past two years. The report states that in the future, banks, fund managers and insurance firms will adopt AI technology in various data and analytic tools to attract potential investors.
Blockchain technology is also increasingly being implemented, with 77% of financial institutions worldwide planning on utilising the technology by 2020. Investment in blockchain companies worldwide rose by 79% in 2016 to $450 million.
The technology is currently being used in businesses more frequently now than in the past, for it is not only easily acquired but also reduces operation costs. Blockchain is mostly used in financial transactions and management of online personal information, with its usage varying from country to country according to their specific levels of technological advancement.
Steve Davies, partner and EMEA fintech leader at PwC UK, said financial business operations use fintech to aid and develop financial innovations whether or not the businesses are fintech-friendly.
Investing in technologies and developing new solutions such as blockchain are important stepping stones in reaching the financial industry's potential, he said.
The current surge in new innovative technologies will ultimately result in productive business-customer relationships. But there are still challenges with the development of fintech, whether industrial pressures for the creation of new innovations or a financial institution's high expectations from fintech startups.
Vilaiporn Taweelappontong, PwC consulting lead partner, said that current financial business operations in Thailand, especially financial institutions, are increasingly using fintech, with many commercial banks exploring the usage of blockchain technology to manage contract information and decrease costs and risk.
Furthermore, increased investment in R&D will also result in the usage of AI and robotic technology to aid manual labour in financial institutions within three to five years, she said.