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New challenges could face financial firms

By Greg Bell

Financial services providers are rife throughout the Gold Coast and if a new report from PwC is to be believed, they could be facing an increasing number of challenges. Many of these risks are posed by financial technology (Fintech) firms – namely those businesses that specialise in more than one area. As the report points out, traditional services firms need to make sure they don't fall behind the competition and become increasingly irrelevant as technology infiltrates the business landscape.

Competition for office leasing on the Gold Coast could also be affected. As more and more companies enter the market, demand for premium office space is likely to reach fever pitch, putting pressure on some of the most popular parts of the Gold Coast.

Taking account of business risk

The PwC report, entitled Blurred Lines: How Fintech is Shaping Financial Services found that almost a quarter (23 per cent) of financial companies believe they could be at risk of the emergence of Fintech. Two-thirds of financial services companies believed pressure on their profit margins could be the biggest related threat, while 59 per cent suggested it could be their loss of market share.

PwC's Asia Fintech leader John Shipman explained that many firms are being forced to reassess their roles. Companies are no longer required to keep to their one area of expertise, but rather can encompass a number of different areas – as Fintech proves.

Mr Shipman stressed that the financial services industry has never really faced much competition before, especially when it comes to overseas activity. This recent shift is therefore likely to come as a shock to many businesses who had previously just followed their own lead.

Why technology is so important

One of the reasons why Fintech has been able to come to the fore is the growing need for technology as part of all business processes. As data from the Australian Bureau of Statistics (ABS) shows, business use of IT encompasses a number of different areas, from the use of broadband to internet-based commerce.

In 2013-14, the ABS estimates that 94.7 per cent of the country's firms had access to the internet. However, only 47.1 per cent had a definable web presence and 30.8 per cent were on social media. Providing sound, reliable internet connectivity is therefore something that buyers of commercial property on the Gold Coast might be keen to secure.

Consumers expect their businesses to be able to use technology effectively, which is why there's potential for these figures to grow even further. People now demand goods and services as fast as they can possibly be delivered, as well as a strong online customer service presence. This is something that applies to businesses in a variety of different sectors, including the financial industry.

Overcoming difficulties

PwC found that some financial companies are choosing not to compete with Fintech firms, but to join forces. This could prove to be a more effective strategy, especially if their growth reaches the heights that many industry experts are expecting.

Figures show 32 per cent of collaborations are achieved through joint partnerships. While this shows a level of embracing these firms, it also suggests that companies might not be ready to commit to direct investment.

Mr Shipman indicated that companies should be keen to find out exactly what they can learn from each other.

"The current lack of understanding of blockchain technology does pose a risk to existing business models – the winners will be the ones that take the time to understand the technology and the opportunity it provides," he commented.

If you're hoping to make the most of the rise in Fintech – or find top quality commercial real estate that helps you to compete on a higher level – then make sure you get in touch. With a presence throughout the Gold Coast, we could be just what you need to get back on track.

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