Banks collaborating with fintech firms
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BANKS and financial-technology firms are collaborating with each other much more than in the past, according to a global study by Accenture released yesterday.
Earlier, banks were afraid that fintech would be a “disrupter” to the banking industry. Now, however, fintech firms are looking to be collaborators with banks, with the result that the banks have increased their investment in these companies and developed mentoring programmes for fintech start-ups.
Nontawat Poomchusri, the global professional-services company’s country managing director for Thailand, said fintech investment in the Asia-Pacific region skyrocketed last year to nearly US$3.5 billion (Bt123 billion) from $880 million in 2014, driven largely by China and India.
The proportion of fintech investment in this region has risen to 19 per cent of the global total from 6 per cent in the past five years.
He said considerable fintech investment in Asean was expected this year because several banks in the region, including Thailand, have begun actively investing in fintech on many platforms.
Last year, global investment in fintech firms wishing to collaborate with the banking industry increased by 138 per cent, representing 44 per cent of all fintech investment, up from 29 per cent in 2014.According to Accenture’s research, venture-capital investment by banks is quite low, totalling only $5 billion of the $22.3 billion worth of fintech investment last year, but the increasing collaboration is expected to trigger more VC investment by banks in the coming years.
Nontawat said regulators should adjust to the trends in financial technology, because slow movement in the regulatory area could be unhelpful to the financial sector. He said this did not mean relaxing regulations on risk management, but new channels should be permitted to support fintech investment.
He said investment in fintech at present was in the payment and lending segments, but Accenture expects to see strong growth in blockchain and cybersecurity technology.
Cybersecurity will grow significantly in the coming years because of the overwhelming media attention surrounding large data breaches.
“Today, we see banks using OTP [one-time passwords] to protect against cybersecurity and fraud, but soon OTP will not be enough, and we will start to see fingerprint and biometric devices,” Nontawat said.
