A new study from Divido, a white label platform for point-of-purchase lending, revealed that legacy IT systems are causing a loss of £157m to UK lenders every year.
In its research, The Global Lending Report, Divido said that the estimated point-of-sale finance of UK lenders will be worth more than £157m to their individual business in the next 12 months.
The Global Lending Report outlines how legacy IT systems are still a hurdle to innovation and how point-of-sale finance is growing. The report also revealed that there is still genuine concern relating to new entrants in the fintech market.
According to the report, UK lenders will be allocating, on average, £19.6m into their point-of-purchase IT infrastructure in the next year. The research, which studied the markets in the UK, the US, Germany, France, Spain, Italy and the Nordics, said that investment into point-of-sale finance is priority for lenders, with two-thirds looking to invest up to £394m in it over the coming 12 months.
In the UK, Divido said that complex legacy infrastructure continues to be a major hindrance to innovation with 54% of the surveyed lenders ranking it as the biggest challenge in terms of delivering payments technology.
Furthermore, the Global Lending Report said that UK lenders are also feeling the effect of growing regulatory clampdown, with 55% listing compliance with regulation during the survey as another hurdle to cross when it came to providing payments technology.
Divido CEO and co-founder Christer Holloman said: “Banks are in a tough place. They’re facing competition from multiple directions but can be held back by increasingly expensive legacy systems that limit product development in-house.
“There is another option, banks can look to use third-party fintech companies to release the increasing pressure on internal legacy IT resources. By doing this, they can safely turn their attention to focus on more timely core business issues, such as defending market positioning, addressing regulatory changes and winning new deals.”
The Global Lending Report was based on the survey of senior decision-makers in the banking/lending space in the seven regions, covering more than 1,000 employees.