UK financial services (FS) firms’ efforts to grow their robo-adviser ranks are leading the rest of the world, fresh analysis from PwC has found. As both global FS powerhouses and agile market entrants vie to harness technological advances and retain – or poach – consumers, almost four in 10 (37%) of UK firms surveyed have implemented robotics processing automation (RPA) compared to almost three in 10 (28%) globally.

These are the findings of the Crossing the Lines fintech report, released today. The extensive analysis collected the views of more than 500 financial services and technology, media and telecoms (TMT) firms. Out of 248 global FS respondents, 41 hailed from the UK. Seven in 10 (73%) of these represented organisations with more than $1bn annual revenue.

The UK’s tilt to expand its robo-advice capability is also offset against the need to maintain trust with a consumer base demanding human interaction for priority services.

UK FS firms were less confident than their global peers that they are meeting customer expectations with the right balance of personalised digital contact vs direct human contact. Of these, 27% either strongly or somewhat disagreed that they have the right balance vs 13% globally.

However, when asked what was most important for customer retention in the context of FinTech, using FinTech to improve personal digital contact was least important (11/11) for UK FS executives, while personal human contact was 6/11, indicating a continued focus for UK FS organisations on 1-1 interactions. This compares to global counterparts who ranked personal digital contact fifth most important, and personal human contact 10th.

Rav Hayer, UK fintech leader and PwC partner, said: “We’re seeing a growing shift towards hybrid human and robo-advice strategies, with even some of the pure-play robo-advisers hiring humans.

“Most consumers want the reassurance of some human oversight alongside access to a human adviser for key decisions. FS firms face a dilemma on how to balance the need for that human interaction with the digitally enhanced offerings customers also expect.

“The fact that personal human contact is globally near the bottom of the list of ways in which some executives think FinTech should be used to retain customers raises questions about the balance.”

Homegrown FS firms’ focus on robo-advice appears to be at odds with the areas in which global players are committing, the survey finds. In relation to the technologies being pursued, UK firms are biding their time on the implementation of all other technologies:

In all, 29% have implemented big data vs 46% globally and 15% implemented IoT, vs 31% globally.

Across all the technologies considered, the UK is more likely to have no plans in the next two years to pursue use of the technologies, in particular blockchain (29% vs 13% globally), 5G (34% vs 17%), and big data (15% vs 4%).

What does the future hold? 

The US, China and the UK are seen as the most important countries for FinTech growth over the next two years for FS organisations. Even when focusing on cross-border growth alone, the US, China and UK offer the greatest opportunity for FinTech growth over the next two years. Outside of their domestic market FS organisations cited the US, China and the UK as having the right conditions for FinTech to thrive.

The survey says 44% of UK FS organisations have already embedded FinTech fully into their strategic operating model (48% globally) while 27% of FS organisations have also incorporated emerging tech into the products and services they sell (37% globally). The product/service area where UK firms have most incorporated emerging tech is payments, where 49% have incorporated it (compared to 56% globally).

In all other areas, the UK is playing catch up eg. traditional deposits (17% vs 46%); Asset management (17% vs 48%), funds transfer (22% vs 52%); mortgage loans (22% vs 44%).

Rav Hayer UK fintech leader and PwC partner, said; “The numbers are telling: 27% of UK FS organisations have successfully incorporated emerging tech into the products and services they sell. The focus to date has been on incorporating emerging tech across payments, personal finance and insurance where 49%, 37% and 32% of respondents reporting emerging tech as already being incorporated.

“Those with the greatest priority in the next two years are Asset and Wealth Management, while there appears to be less appetite overall to incorporate emerging tech into student loans, traditional deposits, and fund transfers.”

The Skills Gap?

Respondents say 63% of UK FS firms are creating more jobs as a result of FinTech (75% globally). However, despite the majority of UK FS firms hiring from technology companies as well as their own sector to access the skills they need, 46% of organisations are struggling to fill the roles created.

When compared to global counterparts, the UK is much less successful in filling these jobs (17% vs 33%).

Only 34% of UK FS organisations have a CSuite Exec responsible for leading their organisation’s technology/digital strategy, compared to 41% of their global FS counterparts.

Rav Hayer, UK fintech leader and PwC partner added: “Increased C-Suite involvement will pave the way for more investment and bring a more attractive environment for real innovation and partnership with Fintechs, helping to bridge the gap with challenger banks for example.

“Our research suggests that priority areas of focus over the next 12 months will be cloud, big data, and RPA, which aligns to the increasing focus on the power of data and the need for scalable computing, data storage and network capabilities to unlock this.”

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