LONDON, Feb. 22, 2017 /PRNewswire/ -- Europe is beset by an under-performing financial services industry and mounting dissatisfaction among consumers, due to the large installed base of legacy systems, incumbents' resistance to change, and unfavourable regulations. The region is ripe for a FinTech explosion as Millennials enter the workforce and demand convenience, as well as nimble and personalised services. This new ecosystem will be particularly conducive for start-ups to launch digital-only, mobile-only services for tech-savvy consumers, compelling incumbents to look at new business models and sign partnerships with start-ups to stay competitive.
"With the rising demand for new channels, user-friendly interfaces and device-agnostic services, incumbents can no longer depend on large, siloed, expensive IT set-ups to serve customers," said Frost & Sullivan Digital Transformation Research Analyst Deepali Sathe. "The use of blockchain, data analytics, artificial intelligence, machine learning, Internet of Things and cloud has altered the way financial services are delivered and consumed. The result is improved efficiency, cost effectiveness and greater satisfaction among FinTech consumers."
FinTech in Europe, 2016, part of Frost & Sullivan's Digital Identification Growth Partnership Subscription, finds that many European countries with high Internet penetration and ease-of-doing-business indices are aware of the impact of FinTech. Advanced technologies will become mainstream within five years, as adoption increases across the region.
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While technology adoption is clearly the way forward for the European financial services sector, the lack of clarity on regulators' perspectives on FinTech and fears of data security are impeding growth. Post-recession consumer trust is at an all-time low as the last downturn was the result of fraudulent deals by regulators across the world, which increased the cost of operations for banks and other financial companies.
Nevertheless, Europe enjoys high demand from consumers and benefits from the presence of the financial services hub—London. With Brexit, many other countries are promoting alternative locations and providing attractive deals to start-ups with a competitive structure, but it will be awhile before they match the UK's strong infrastructure and ecosystem.
"Following the focus on advanced FinTech solutions, the segment that is likely to experience the most disruptions is payment," noted Sathe. "Once consumers become familiar with online payment options, the presence of large tech players such as Apple and Google will further drive the growth of the payments segment."
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SOURCE Frost & Sullivan