Financial services (FS) and technology, media and telecommunications (TMT) industries are using fintech to improve customer experience and heighten the appeal of their products and services as well as to sharpen operational efficiency and lower costs.

They’re also carving out new commercial possibilities, according to PwC’s 2019 Global Fintech Survey.

The survey polled over 500 financial services (FS) and technology, media and telecommunications (TMT) executives worldwide to figure out the factors that will determine the winners and losers in the race to develop and profit from fintech-driven business models.

In financial services, digital-only banks are offering redesigned client propositions and value propositions to clients. Investment managers are deploying fully customised robo-advice.

Insurers are using sensors to monitor people’s health and drive illness prevention.

And, according to a recent PwC survey, consumers are ready for the digital shake-up. The question is no longer whether fintech will transform FS, but which firms will apply it best and emerge as leaders.

Costa Natsas, PwC Africa’s financial services leader, comments: “South Africa’s financial services sector is undergoing a process of unprecedented change brought about by the disruptive impact of fintech challengers and the emerging technologies powering their business models.

“Fintechs are redrawing the competitive landscape and blurring the lines that define players in the FS landscape.

“In Africa, Fintech investment is estimated to have increased by a CAGR of 58% between 2014-2016 and could possibly be valued at $3bn by 2020, with South Africa and Nigeria receiving a significant portion of these investments, according to PwC research.

“Customers’ behaviour, and their expectations around how companies interact with them, is changing quickly. The FinTech industry is driving these changes in financial services, and the established businesses in the industry who recognise this are having to learn fast.

“This is leading to a reassessment of many elements of the customer experience and engagement process that will play out over the next few years.”

Adopting a fintech-centred strategy is paramount. The survey found that 47% of TMT and 48% of FS organisations have embedded fintech fully into their strategic operating model. Also, 44% of TMT and 37% of FS organisations have incorporated emerging technologies into the products and services they sell.

FS can look to TMT for ideas about how best to use fintech. FS executives surveyed think that using fintech to improve the ease and speed of their service will be key to retaining customers.

But people expect ease and speed, so firms that focus their fintech efforts on these attributes might only meet customers’ expectations and not differentiate themselves, especially when competing with digitally sharp-intuitive TMT businesses.

Elmo Hildebrand, TMT leader for PwC South Africa, says: “TMT leaders see personalisation as the key to keeping customers. In a marketplace that’s moving rapidly towards mass customisation, we expect that using fintech in this way is more likely to create differentiation, so it would be good for FS firms to learn from theTMT approach in this regard. FS companies that don’t learn and adapt may risk being left behind.”

FS and TMT should look to each other and retrain to fill skills gaps. The survey showed that 80% of TMT and 75% of FS organisations are creating jobs related to fintech. Yet 42% of both TMT and FS organisations are struggling to fill these roles.

While 73% of FS organisations are hiring from the technology sector, only 52% of TMT firms are looking to recruit from FS.

Finding ways to attract people from TMT to FS, and vice versa, will be important to future success because each sector needs the other’s expertise. Upskilling will also be important.

Hildebrand adds: “Finding ways to attract people from TMT to FS, and vice versa, will be important to future success because each sector needs the other’s expertise. Upskilling will also be important, as will the right mergers, acquisitions and joint ventures.

Firms should push cross-sector fusion further. Among organisations that are planning to pursue an acquisition, strategic alliance or joint venture to drive growth via fintech, 78% of TMT and 76% of FS firms are targeting businesses within their own sectors.

Fewer than half (44% of TMT and 47% of FS organisations) are targeting a company specialising in fintech. At a time when FS firms are striving to sharpen their technology capabilities and TMT firms needing product and regulatory expertise to compete in the FS market, firms will miss opportunities if they don’t pursue more cross-sector cross-over.

Emerging technologies have given companies a low-cost way of creating convenient, personalised, data-intuitive products and services. Fintech has also lowered the barriers to entry for firms – from established FS groups to startups or TMT entrants – and has therefore created a complex web of cooperative competition, or “coopetition,” and collision.

Companies that have embraced fintech are reshaping the marketplace, and those that haven’t are being left behind.

Three-quarters of the FS and TMT executives surveyed said they’re stepping up their fintech investment in the next two years. More than 90% are very or somewhat confident that fintech will deliver revenue growth over the next two years. But focus, maturity and speed to market vary.