FinTech services are creating problems for big banks with a revolutionary consumer-centric offering

London, February 2016 – As banks embark on their reporting season, the traditional institutions are setting out how they have fared in a tough global environment. Credit Suisse are due to release year on year results on Thursday, which are expected to show that the restructuring undertaken by the Swiss bank has not yet fed into their share price. Last week’s report from Deutsche Bank showed their first full year loss since the financial crisis of 2008, attributed by their CEO to on-going legacy issues.It is clear that traditional banks are feeling the pressure from the disruptive impact of FinTech innovators.

These pressures are highlighted particularly in the retail sector, with those banks with high exposure to customers experiencing profound disruption from FinTech competitors. A report by PwC highlights that 55 per cent of bank executives believe that non-traditional players pose a threat to traditional banks. The report identifies the development of a customer-centric business model as the highest priority for banks if they are to remain competitive over the next 5 years.

Technological innovators such as TransferWise, Nutmeg and Funding Circle are increasingly fragmenting the market by unbundling financial services to create an agile offering. They are disturbing the established order by leading with customer focused innovation. This characteristic is at the heart of the battle between the FinTech sector and traditional banks.