Should traditional financial services firms buy, build or partner for fintech capabilities?
A solid fintech strategy can help banks, insurers and asset managers determine the right answer for their specific organizations, and yet, less than half don’t have a strategy in place addressing their needs.
According to a recent KPMG survey, 57 percent of established financial institutions said emerging financial technologies such as blockchain, robotics and cognitive learning are the greatest source of industry disruption in our time. However at 46%, less than half of those surveyed said they have a fintech strategy in place to handle it. A further 42%acknowledged they are in the process of developing one.
More broadly, first quarter financial results were solid for the overall financial services industry. Average price-to-earnings (P/E) ratios decreased somewhat as earnings growth outpaced share price increases through March, but a positive U.S. economic outlook helped price-to-book ratios remain at a near high.
Meanwhile, return on average shareholders’ equity (ROAE) improved over the fourth quarter following a one-time valuation adjustment to deferred tax attributes, and boosted by earnings increases in the first quarter.
Most firms that are looking to either begin to incorporate or formalize their financial technology strategies. They will likely do so from a position of ongoing strength. For more on how the financial services sector is adapting to the changing landscape, visit Insights on Financial Services M&A.