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Despite a volatile environment, the fintech sector reported 11% year-over-year deal activity growth in Q4 2020, after four consecutive years of decline, IT services and consulting company Capgemini found in its latest World FinTech Report. Fintechs with a diverse product portfolio are winning investor backing, as well.
As an industry, fintech proved resilient during the COVID-19 pandemic with verticals showing double digit growth despite operational and financial challenges. With the growing popularity of fintech, traditional banks are creating digital-only entities to appeal to specific customer segments. The annual World FinTech Report explores how successful fintech startups have breached the profitability barrier and analyzes alternative options for banks to alleviate the competitive threat.
While fintech companies have turned up the heat, consumers still trust traditional banks more: Even though consumers are warming up to fintech, they still trust traditional banks, and 68% said they would try a digital-only offering operated by their primary bank.
Potential for seamless digital engagement is clear: Incumbents are preparing to leverage their strengths while addressing their weaknesses to remain relevant into the future. Of the banking executives surveyed, 63% said a digital-only subsidiary enables ubiquitous banking, 50% said it drives new products to market faster, and 52% said it makes collaboration easier thanks to plug-and-play functionality.
The World FinTech Report 2021 draws insights from two primary sources: The Global Voice of the Customer Survey 2021, and the Executive Surveys and Interviews 2021, which cover insights from 33 markets. The Voice of Customer survey had 8,559 customers with a 22% response rate in the Americas, and the Executive Survey received insights from 122 banking executives with 29% response from Tier 1 banks (assets > USD50billion) and 71% from Tier 2 banks (assets < USD50 billion)
Read the full Capgemini World FinTech Report.
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