White label platform for point-of-purchase lending specialist Divido has released the findings of its latest research which indicates that UK lenders have lost estimated point-of-sale finance will be worth over £157 million to their individual business over the next 12 months.

Alongside this, UK lenders are set to invest an average of £19.6 million into their point-of-purchase IT infrastructure over the next year. That said, across the seven markets, investment into point-of-sale finance is top-of-mind for lenders, with two-thirds planning to invest up to £394 million into this space over the next 12 months.

Complex legacy infrastructure remains one of the biggest barriers to innovation with 54% of UK lenders ranking it as the biggest challenge when it comes to delivering payments technology. UK lenders are also feeling the impact of increased regulatory clampdown, with 55% listing compliance with regulation as another hurdle to overcome when delivering payments technology.

In the report Divido surveyed senior decision-makers in the banking/lending space across seven different regions, including the UK, U.S., Germany, France, Spain, Italy and the Nordics.

Christer Holloman, CEO and co-founder, Divido 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.”

New entrants are a top concern for 75% of lenders, with Europe feeling the biggest impact in light of regulations such as PSD2. No lenders agreed that they are confident about their ability to compete with new market entrants, with 32% highlighting the ease at which new entrants can integrate with other businesses’ IT infrastructures as their biggest concern.

That said, global collaboration among lenders and fintechs is firmly on the rise, with two-thirds stating that they would consider partnering with a third party platform provider to deliver services to consumers. Overall, only 3% of lenders felt fintechs were their competitors, not their collaborators, paving the way for more partnerships to deliver better experiences to customers.

Holloman continued “This is decision time. Banks can double down on existing routes to deliver services such as point-of-purchase finance/loans, to the digital economy. Others can partner with fintechs. One way or another, banks will need to find ways to maintain and grow the lending relationship with the customer, or risk losing out to competitors and new entrants.”