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Fintech making inroads, but US bank revenues little changed
FINANCIAL technology startups and other new entrants are making inroads in the US banking market, but have yet to capture a threatening share of bank revenues, according to research published by Accenture Plc on Wednesday.
Around 19 per cent of financial institutions in the US are new entrants, such as challenger banks, non-bank payments institutions and big tech companies, according to the report.
Yet they have amassed only 3.5 per cent of the total US$1.04 trillion in banking and payment revenues so-far, Accenture found.
In the UK, new entrants have made a larger dent, having captured 14 per cent of the total 206 billion euros (S$327.63 billion) in industry revenues, with the majority going to non-bank payments companies, according to the report.
Accenture assessed more than 20,000 banking and payments institutions across seven markets around the world to determine the level of change that digital technologies have brought about in banking.
Since the financial downturn, a growing number of companies across the world have sought to position themselves as cheaper and more user-friendly alternatives to banks by making better use of new technology.
Banking and payments institutions have decreased by nearly 20 per cent from 2005 to 2017. Still, one in six current institutions is what Accenture considers a new entrant, or companies that have entered the market since 2005. Their impact has varied by geography.
Tougher regulations and greater dominance of large banks have made the US a more difficult market for new entrants in areas excluding payments, said Alan McIntyre, head of Accenture's global banking practice.
"You still have a very robust banking market in the US," he added
More than half of new current accounts opened in the US have been captured by three large banks, which have had more money to invest in digital than smaller regional players, he said.
New entrants account for 63 per cent of financial players in the UK, according to the report. REUTERS