With the EU’s Second Payment Services Directive (PSD2) and open architecture framework set to come into force next year, regulation may well tip the scales between banks and fintechs for customer loyalty, according to a study by Temenos, the software specialist for banking and finance.

Banks cite regulation as the most impactful trend in the coming years, along with bank capital requirement regulation (54 per cent), bank product suitability regulation (53 per cent), product design and transparency regulation (47 per cent), and regulatory fines and recompense orders (30 per cent).

The report, entitled ‘Symbiosis: Your bank has your trust. Can fintech make you love it? is the fourth in a series conducted for Temenos by the Economist Intelligence Unit (EIU).

Banks’ main concerns on cyber security are lack of system preparedness in the event of a cyber attack (65 per cent) and the ability to maintain data security (60 per cent).

The possibilities of blockchain are still not fully understood; 34 per cent think of it only as a tool to reduce financial crime while 34 per cent see its greatest value in increasing the speed and reducing the cost of back office functions.

The majority of bankers surveyed (55 per cent) think that anti-globalisation movements will negatively affect retail banking by 2020.

David Arnott, CEO of Temenos said: “The struggle between banks and fintechs for customer loyalty is not new, however new regulation and technology change is now driving a shift towards collaboration.

“Banks with a modern core and an open and flexible architecture will be best placed to seize the advantage and thrive.”

Renee Friedman, the editor of the report from the Economist Intelligence Unit, added: “Banks will increasingly have to adapt their culture and digital strategies to their customers’ needs if they are to compete, not expect their customers to bend to theirs.”