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 threat of cyber incidents is ranked as the number one concern for UK businesses this year, according to a survey of risk experts by Allianz.
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