A study has suggested that financial services firms around the world plan to invest in financial technology (fintech) research and development (R&D) in 2016/2017.
Polling ISITC members
The International Securities Association for Institutional Trade Communication (ISITC), has recently released the results of its latest survey. According to Blockchain Finance, a fintech news site, this is an annual poll of ISITC members which seeks to ascertain financial firms’ plans for the coming year.
ISITC questioned 45 of its member firms. These businesses range from leading investment management companies and financial solution providers to brokers, dealers and industry custodians. The survey found that 65% of members believe that investment in technology should be a primary area of focus for their businesses in 2016/2017.
Particularly, companies questioned by ISITC cited ‘blockchain’ – the public ledger for cryptocurrency bitcoin and ‘cyber-security’ as high areas of interest for R&D in the coming year. Over half (55%) of respondents admitted that they are monitoring, researching or already developing solutions for blockchain technology. Meanwhile, 74% of financial services companies said that they have plans to invest in improving cyber-security, a rise from 57% the year before.
Commenting on the results of the survey, ISITC Chair and Vice President Jeff Zoller said: “New and emerging technologies have taken the financial services industry by storm. The results of our annual member survey confirm this sentiment, as firms plan increased investment in blockchain and cybersecurity technologies, as a method for combating long-term risk and cost.” Four-fifths (80%) of financial services firms said that they see ‘cost reduction’ as their biggest challenge in 2016/2017.
Htet Tayza’s commentary
It’s unsurprising that globally, financial services firms want to invest in fintech R&D during the coming year. Data suggests that in 2014 alone, global investment in the fintech sector increased three-fold. High investment in fintech is being driven by consumer sentiment. Over half (53%) of 2,000 adults polled by Nostrum Group, a lending technology provider, now use a mobile banking app. Therefore financial services need to develop technological infrastructure to support digital finance.
But why are financial services firms particularly focusing on blockchain and cyber-security R&D? Professional services network Grant Thornton found that cyber-attacks cost global business over £200 billion per annum. They suggested that the international financial services sector is the industry most impacted by cyber-attacks, with three in four companies citing it as a major concern. Therefore, it’s clear that financial services firms need to develop ways to protect consumer data, like blockchain, so they can take advantage of the emerging fintech industry and build up their bottom lines.