According to PwC’s recently released “Canadian Banks 2016: Embracing the FinTech movement” report, Canadian banks are laser-focused on responding to the threats and opportunities posed to the banking industry, at the hands of a group of new companies building financial technology solutions.
FinTech offerings range from competing financial services such as alternative lending, to additive solutions atop existing banking services, to enabling technologies for the banks themselves.
According to the report, banks have a great deal to gain from FinTechs’ innovation which may become essential in propelling the sector forward by reimagining operating models, streamlining costs, increasing reach in underserved markets, innovating through new product development, and opening new revenue streams.
In some cases, FinTechs will be viewed as enablers to traditional innovation and continuous improvement. In others, it presents a series of disruptions and threats as they continue to make inroads into banks’ traditional territory by offering a competitive service or products.
“Canadian banks must stay the course with a long term view and continue, as they have, to respond to the needs of an evolving market to create a stronger ecosystem that will position them to be even more competitive on a global level. This must encompass business model innovation, technology and architecture enablement, as well as cultural evolution to align with the new realities imposed by the tremendous uptick in the FinTech space,” says Diane Kazarian, National Financial Services Leader, PwC Canada.
The report also indicates that Canadian banks continued to see strong performance in 2015, achieving positive revenue growth and posting solid returns. In addition, they improved their 2016 first quarter results over last year despite a slowing economy, slumping commodity prices and low economic growth.