Banking software vendor Temenos carried out the third annual study of retail banks in association with the Economist Intelligence Unit.
The study, Retail Banking: In Tech We Trust, revealed that banks identify the threat from tech firms operating in the financial services sector as much larger currently than a year ago.
More than 200 global, retail banking executives were surveyed under the study, with over half of executives at C-level.
The majority of respondents estimate that retail banking will become fully automated within five years.
Their concerns include a predicted dramatic drop in the use of cash on the high street by 2020, with fintech firms supporting the most of payments, and freely available peer-to-peer lending via banking platforms.
Banks are making technology part of their offerings and spending in digitization in order to respond to the technical threat, the study said.
Temenos said threats to banking are coming from companies like Google with its Android Pay, and by Apple Pay, and from peer to peer lenders and fintechs operating in the wealth management sector.
The survey identified three main areas that should change for retail banking to survive in the coming years.
36% said that changing the banking branch was key, while 35% and 31% highlighted the need for getting the right talent and modernizing their technology respectively.
Temenos CEO David Arnott said: "Our study shows that banks have clearly woken up to the threat fintechs pose to their business. Last year we found that regulation and compliance were receding as threats. This year we can see that that trend has accelerated.
"The banks’ response is to look at ways of beating the fintechs at their own game. This may be partnering or co-operating with service providers, or investing in their own digital platforms."
Image: Temenos carried out the third annual study of retail banks in association with the Economist Intelligence Unit. Photo: courtesy of sixninepixels/FreeDigitalPhotos.net.
