A whopping 83% of financial institutions in Europe, the Middle East and Africa (EMEA) fear their business is at risk of being lost to standalone FinTech companies.
That is according to a new report from Aon, which reveals 9% of these businesses claim they have already suffered a financial loss because of independent FinTech firms.
In addition, 49% believe they are unprepared to adapt to innovation, with nearly a quarter saying they have suffered a monetary loss over the last 12 months as a result.
Because of this, ‘disruptive technologies’ and ‘failure to innovate’ have been identified as two of the top 10 potential risks facing these organisations for the first time.
“The risk environment for financial institutions continues to evolve rapidly as the magnitude, scope and complexity of risk increases globally,” Aon EMEA chief commercial officer, Enrico Nanni, said.
“The evolving economic landscape and trend towards disintermediation is reflected in ‘failure to innovate’ and ‘disruptive technologies’ entering the top 10 risks, as financial institutions grapple with rapidly changing consumer and corporate habits.”
The top ten risks facing EMEA financial institutions are shown below:
For the second time running, damage to brand and reputation has emerged as the top ranked risk, while cybercrime has moved up into the top five threats.
However this is predicted to change significantly over the next few years, with regulatory and legislative changes expected to be the number one risk facing EMEA financial institutions by 2020.
This is predicted to be followed by an economic slowdown or slow recovery, with cybercrime, failure to innovate and damage to reputation or brand completing the top five threats by the end of the decade.
Aon head of EMEA financial institutions, Herman Kerremans, said: “The disruption to financial markets in the last decade confirmed that managing risk is key to achieving growth and profitability.
“In an environment with more regulation, protracted low interest rates and tight capital requirements, this report provides comprehensive research and industry specific data, allowing organisations to benchmark their risk management and financing against their peers”.
The average number of cyber attacks with the potential to cause damage or result in the loss of high-value assets more than doubled in the first month of this year per organisation compared to in January 2017.
17 April 2018
Approximately one-third of UK business leaders would pay a ransom if they suffered a cyber attack, with one in ten willing to fork out £1m or more to get their systems and data back.
04 April 2018
Financial institutions across the world are increasingly turning to technology to manage a growing number of digital threats and regulatory requirements.
03 April 2018
Why InsurTech? A Pressured Insurance Value Chain
By Andrew Sagon, Andrew Johnston and Matthew Wong
InsurTech is a burgeoning phenomenon that is modernising the insurance industry. It is disrupting the traditional value chain whereby insurers offer loss protection, and shifting the emphasis to risk mitigation. Incumbents face disintermediation as investors in search of higher yields pour money into insurance-linked instruments in the capital markets. And entrepreneurial businesses are targeting friction costs and inefficiencies within every aspect of the traditional value chain.
Nimbleness and agility will unlock potential
By Elinor Friedman, Andrew Harley and Klayton Southwood
Recent Willis Towers Watson surveys in the U.S. have shown that P&C and life insurers in developed markets are taking seriously the potential of big data and predictive analytics to improve their businesses. Nimbleness and agility, rather than brute force, are likely to be key to realizing that potential.
Driven by technology, toolkits and talent
By Claudine Modlin and Graham Wright
Advanced analytics is helping some insurers offer innovative products and solutions. What do insurers need to know about the changing nature of analytics and whether it is worth the investment? Claudine Modlin and Graham Wright discuss technology, toolkits and talent — topics that may help you decide.
Risk transfer is part of a comprehensive solution
By Adeola Adele, Patrick Kulesa, Kevin Madigan and Alice Underwood
Given the dynamic nature of cyber-risk, taking a multidimensional approach that integrates board governance, technology solutions, behavioral change and risk transfer solutions can help reduce risk to a manageable level.