Giant European banks are "fighting back" against the growing danger posed by payment processors, neobanks, and platform companies.

As per the findings of a recent study conducted by Economist Impact in association with Temenos, nearly half (43%) of Europe's banks are funding fintech firms.

Furthermore, a minimum of 36% of conventional banks in the area are constructing their own fintechs, or greenfield digital banks.

Jonathan Birdwell, Economist Impact's global head of policy and insights
The use of new technology to improve customer experiences was pioneered by fintechs and neobanks, according to Jonathan Birdwell, Global Head of Policy & Insights at Economist Impact.

"Now that non-traditional players have successfully used technology to reach consumers underserved by traditional financial services and to appeal to existing customers with support in managing their personal finances, European banks are fighting back."
 

Conventional banks view developing technologies as valuable.

Temenos hired Economist Impact to conduct a global survey of 300 executives from different departments within retail, commercial, and private banking institutions in an effort to better understand emerging trends in the banking sector. C-suite executives made up half.

Europe accounted for 25% of these experts, followed by North America (23%), Asia-Pacific (18%), the Middle East and Africa (17%), and Latin America (17%).

Researchers found that European banks are more than their counterparts in other regions in migrating their core banking systems to public cloud and SaaS. Additionally, 21 percent of European banks view cloud as a strategic priority to ensure that their operations are secure and agile, allowing them to compete with more agile rivals.

Additionally, AI was discovered to be a crucial component of technology investment strategy, especially in relation to enhancing customer experience and bolstering digital marketing. Seventy-five percent of European bank officials think generative AI will have a big impact on their industry.
 

Banks are still leery of fintech companies.
According to a research by Economist Impact and Temenos, European banks are more likely than those in other regions to see neobanks as their main rivals over the next five years.

Fintech companies and payment players, however, continue to be highly thought of, with payments being the industry where new entrants are expected to capture the largest market share.

HSBC just launched Zing, a new multi-currency payments app to rival Wise and Revolut, demonstrating how banks are already attempting to counter or adapt to this threat.
Temenos's Chief Strategy Officer, Kanika Hope
According to Temenos Chief Strategy Officer Kanika Hope, "the competitive landscape is shifting." "Europe's banks are taking advantage of the opportunities afforded by open banking by pursuing collaborations with their challengers to offer a wider range of better services to their customers, while neobanks and fintechs face funding difficulties and growing pains."

"They are also investing in technology, utilizing SaaS and cloud-native banking platforms to enhance customer experience and guarantee secure and agile operations."