CI businesses want to embrace FinTech - but don't have the resources

Monday 05 February 2018

From print faces on latte froth to 3D printing, technology is revolutionising the way we live and work across local businesses. Getting finance on board is the next frontier – but are Channel Islands businesses ready to embrace it?

According to a recent report by EY on the emerging ‘FinTech’ sector, the answer is yes – but they don’t have the information or resources to do so.

The survey suggested that almost nine out of 10 respondents saw the potential in FinTech, but only 13% reported that their businesses would be able to develop their own FinTech solutions without external help. 

Those ‘solutions’ include:

• blockchain: a kind of digital ledger that keeps accurate, up-to-date and unmodifiable record of cryptocurrency movements.

• PaymenTech: everything from ApplePay to using bitcoins for buying.

• RegTech: using technology to deliver regulatory requirements.   

• InsurTech: from in-car ‘black box’ driving monitors to insurance comparison sites.

• Alternative financing: financing outside the world of stocks, bonds and cash.

• Robo-advice: putting users through online Q&As and letting algorithms dictate an investment plan.

Of the list of six ‘next big things’, respondents said they had the best understanding of RegTech – a likely result of the fact that over a third of respondents are either already using or intend to use it soon.

Nonetheless, they were found to be “below average” in their comprehension of InsurTech. 13% said they either had already implemented or were due to implement some form of this.

Pictured: Around 16% of Channel Islands businesses said they were using a form of PaymenTech, such as mobile or online payments.

Around a fifth of respondents were engaged in Blockchain, and slightly fewer in PaymenTech (16%).

88% overall said that FinTech innovations could be an “opportunity” for the sector, stating that the biggest advantages would be driving business efficiencies, data integrity, speeding up transactions and keeping a better audit trail.

But despite seeing the benefits, just over a third of CI businesses remain cautious and have not yet gone near FinTech.

Data security was listed as the biggest worry, followed shortly after by cost vs benefit concerns.

“Despite the many opportunities FinTech solutions offer, there are many perceived barriers that need to be overcome. All businesses handle sensitive information about individuals and enterprises, therefore one of the biggest concerns for businesses is over data security.

“Through undertaking FinTech partnerships, financial institutions are expanding the perimeter of their organisation; cyber security threats that arise from this pose an increased challenge for the industry. Other perceived drawbacks include the cost to implement as well as the lack of resources available to businesses,” the report noted.

 Pictured: EY's Ove Svejstrup, one of the authors of the report.

Lack of access to resources with appropriate skills and not having the time were also high up on the list of perceived barriers – a possible reason why more than half of respondents said they’d be more likely to use ‘off the shelf’ technology or contract third parties to help develop FinTech tools. 

Ove Svejstrup, Associate Partner at EY and joint-author of the report, said that the results heralded a new beginning for the Channel Islands, concluding: “It is the right time for Channel Island businesses to have a conversation about FinTech, how it can benefit them and how they can go about leveraging these innovations.”

“Our findings reflect considerable consumer appetite for new and innovative financial services products alongside a desire for more information and understanding about the specifics of these solutions,” he commented.

Digital Jersey’s Head of Strategy Lloyd Adams added: “Jersey is seeing the emergence of a prosperous FinTech industry, offering convenient, safe and personalised services to its global customers. The use of technology to innovate within financial services will ensure we have rewarding jobs in the future, which is good for the economy and our local community.”