- Over half (54%) of financial services firms are increasing investment in disruptive and innovative technologies over the next 12 months to meet the challenge of new market entrants
- Firms plan to boost IT spend by 15% in the next 12 months to compete with FinTechs
- Online investment firms and challenger banks seen as most market disruptive
London, 31 August 2016 – New research from leading specialist recruitment consultancy Robert Half Financial Services reveals over half1 (54%) of traditional financial services firms, such as banks and investment houses, are increasing their spend on disruptive and innovative technologies in the next 12 months to meet the challenge of new market entrants. The impact of the dramatic rise of digital ‘challenger’ business models throughout the financial services sector has had a direct impact on investment in IT solutions. Financial services firms boosting IT spend plan to do so by 15% in the next 12 months, with multi-million pound investment programmes implemented to help compete with new FinTech market entrants.
Online investment firms (26%) and challenger banks (24%) have been identified as the new market entrants to cause the most disruption to traditional financial services firms in the next 12 months. Twenty new challenger banks have lodged applications with the Bank of England in the hope of receiving a banking licence, according to officials2. The growth in new digital platforms has led to a dramatic increase in the ability of smaller players to challenge established providers. Peer-to-peer lenders (16%) and online traders (13%) were also cited as potentially the most disruptive new market entrants.
Table one: New entrants most likely to cause disruption to traditional financial services companies in the next 12 months
Type of business | Percentage of FS executives who believe this business category will be the most disruptive |
Online investment firms | 26% |
Challenger banks | 24% |
Peer-to-peer lenders | 16% |
Online traders | 13% |
Non-traditional – new entrants | 8% |
Crowdfunding | 6% |
Mobile payments | 4% |
Digital currencies | 3% |
The rapid expansion of the UK FinTech industry is exacerbating the current war for talent. The vast majority (91%) of financial services, banking and insurance executives are concerned the growth of the FinTech sector will negatively impact their ability to attract skilled professionals with relevant sector experience, including 35% who say they are very concerned.
The research also highlights that 85% of executives in the financial services sector are nervous about their ability to retain their own top performers in the face of new FinTech competition, with almost a third (32%) very concerned. They are also worried that the expansion of FinTech enterprises will impact their ability to maintain or grow market share (83%), with 30% of these professionals extremely anxious.
Luke Davis, vice-president, 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.
“Financial services professionals with experience of managing digital projects, such as enhancing the customer experience through digital technologies for mobile, tablets and wearable devices are in hot demand, particularly for interim roles, as firms seek to create digital solutions that are both innovative and compliant.”
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Notes to editors
About the research
1 The survey was conducted by an independent research firm and includes responses from 100 executives in the financial services industry across the UK In April 2016.
About Robert Half
Robert Half is the world’s first and largest specialised recruitment consultancy and member of the S&P 500. We have once again been named to FORTUNE’s “World’s Most Admired Companies®” list and remains the top-ranked staffing firm (2022). Founded in 1948, the company has over 300 offices worldwide providing temporary, interim and permanent recruitment solutions for accounting and finance, financial services, technology, legal and administrative professionals. Robert Half offers workplace and jobseeker resources at roberthalf.co.uk and twitter.com/roberthalfuk.