Your IndustryAug 31 2016

Financial firms throw cash at tech to ward off new entrants

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Financial firms throw cash at tech to ward off new entrants

More than half of financial services firms have boosted their investment in disruptive and innovative technology to meet new market challenges.

A study from specialist recruitment consultancy Robert Half Financial Services has revealed 54 per cent of firms - including banks and investment houses - are upping their spend on new technology over the next 12 months.

A number of multi-million pound investment programmes are being rolled out to compete with fintech market entrants, with online investment firms and challenger banks seen as most disruptive.

The report found 20 challenger banks lodged applications with the Bank of England to receive a banking license.

Luke Davis, vice-president of Robert Half Financial Services UK, said: “Digital transformation plans are ramping up among both the front and corporate offices of financial services firms, largely the result of competition from the fintech industry.

“This reaction is seeing established firms review their traditional models to offer customers, clients and employees new services using innovative technologies.”

The research found 91 per cent of financial services executives are worried the fintech sector will negatively impact their ability to attract and retain skilled professionals while 35 per cent have said they are very concerned.

There is also growing concern that as fintech enterprises expand, there will be a negative impact on the ability of traditional financial services to maintain or grow their market share.

But Aj Somal, a chartered financial planner at Aurora Financial Planning, said innovation is a good thing.

He said: “Anything in terms of change and innovation creates opportunities which in turn allows growth areas for financial advice firms.

“For example, robo-advice could help to service clients who previously weren’t viable. With technology, firms can offer niche opportunities. It shouldn’t be feared, but we should see change as good.”