Retail banking faces significant threat from FinTech entrants: Study

New Delhi, June 21 (IANS) Retail banking faces significant threat from entrants in Financial Technology (FinTech) space who are using simpler and less expensive services and depending on their scalability, could even prove disruptive for the traditional banks, a study said on Wednesday.

Despite retail banking being a tech-intensive industry, FinTech providers - having few similarities to traditional banks - are attacking virtually every product category in banking, said the joint study by Tata Consultancy Services and Clayton Christensen Institute for Disruptive Innovation.

New FinTech entrants use technology and innovative business models to provide less expensive, simpler and more accessible services, it said.

"In each product category, new entrants pose a competitive threat to banks, but the conditions are not always ripe for disruption. Instead, many FinTech innovations are being launched to sustain or improve existing products, making them attractive for both new entrants and existing banks. Therefore, as long as incumbent banks are incentivised to adopt these solutions, rather than ignore them, disruption could be less of a factor," the study stated.

"But this does not mean disruption is impossible, particularly if FinTech entrants are able to scale up from a foothold in an underserved market," it added.

Whether FinTech entrants or incumbent banks, individual organisations must make a careful assessment of the disruptive and sustaining potential of innovations in their respective industry, said report co-author Subhajit Das.

"Doing this will enable them to stay ahead of their immediate competition and thrive in this period of change," he added.

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