Fintechs are failing to prove themselves and disrupt the financial services industry, and should instead seek to collaborate with the larger players, a new study shows.
The joint report from consulting and technology company Capgemini and the University of Sydney Business School finds while fintechs may provide customer convenience, price advantage, access and greater choice, incumbents are retaining one important advantage - customer trust.
Stability and security have helped banks and traditional institutions maintain their dominant position, but are losing the younger, tech-savvy Gen Y customers to alternative financial services providers, the report said.
It suggests fintechs and incumbents are better off collaborating rather than competing with each other. For incumbents to adjust large-scale systems and processes to be more responsive is difficult compared to fintechs' agility and nimbleness.
It is therefore critical for fintechs and the banking sector to work together to combat the looming threat posed by Apple and Amazon, the report urged.
"Banks and fintechs should adopt a strategic approach and collaborate throughout the innovation process, leveraging each other's' strengths to deliver maximum benefits from digital initiatives," Capgemini Australia and New Zealand director of digital customer experience Nicolas Boussand said.
The report also found insurtech has been slow to launch in Australia, but is poised to disrupt the local and global insurance industry. The fintech sector is predicted to grow exponentially to more than $4.2 billion by 2020.
Meanwhile, Capgemini appointed Olaf Pietschner as its chief operating officer for Australia and New Zealand. He's previously held executives IT roles at Origin Energy, and News Corp.