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Already answered: PayPal, SQUARE, Starbucks and Apple Pay "...helped merchants otherwise accepting only cash to start accepting card payments. Banks gained a new source of interchange revenues." Note also that PayPal and SQUARE are both merchant aggregators and get their fees from the higher MSC / MDF borne by their merchants - e.g. 2.75% in the case of SQUARE - and not from banks. In other words, banks don't suffer any reduction in their realization when the transaction happens via PayPal / SQUARE. 

Well said @BjornSoland. User education fails to deliver. Not just security. I for one have never believed that if people went thru' financial literacy training or used money management apps, they'd suddenly become more thrifty or investment ninjas or whatever. Money is something basic. "Earn more, spend less" should be all the lesson people need! But that's only me!

@ChrisYaldezian:

This is becoming like a broken record. Which part of my above comment is not clear?

• “PayPal, Starbucks, ApplePay - and Square, which you've missed out but is often quoted in the same breadth as the others - none of them has disrupted banks. On the contrary, all of them have helped boost revenues of banks.”
• (Chris Skinner): "In fact, the more I think about things the more I realise that most fintech is supplementing the bank industry rather than disintermediating, disrupting or displacing it.”
• When a partner wins a deal and earns a commission for that, certainly IBM's own revenues come down. But does that mean channel partners are disrupting IBM?

I already know many banks who use analytics and omnichannel:

• Analytics or Hair Splitting?
• Are Banks Losing Customers Or Shedding Customers?
• From Multichannel To Omnichannel And Beyond

While there’s scope for improvement, that’s an eternally valid platitude - applicable not only for banks but for all other industries, not just for these two technologies but for all other technologies.

@BrettKing:

You should know from the sequence of comments that your name wasn’t called out by me but by the commenter above me, who virtually ordered me to "Read some Bret (sic) King." In reply, I referred to your claims about death of cash, plastic and branch. I didn’t make generic attacks. You’ve made those specific predictions in your own blog posts Why Ebola might kill cash, Why the iPhone 5 means the end of the swipe and cards and If you're investing in branches - look out. Maybe it's only me but words like "kill", "end" and “absolutely no chance of survival” usually mean death.

In response, what do I see? "6% decline in branch transactions" (Source: Your blog post titled Predicting the future is hard, but online surveys are useless trending indicators); "Cash on the wane" (Source: FT article titled Cash on the wane in UK as plastic powers ahead). ‘6% decline’? ‘Wane’? They don't mean death. To cite a more recent source than the FT article, this Financial Brand article says "cash is still king today". ‘Plastic powers ahead’. That actually means growth – not death - of plastic. Let’s agree to disagree but I continue to believe that there's no disruption / death of cash, plastic or branch as of now.

Your response Predicting the future is hard, but online surveys are useless trending indicators seems to be baselined to your predictions made by you somewhere else. I never called out those predictions. So, I didn’t think it warranted my comment. That said, I did reply to your comment on this post right below it. I’ll continue to make my future comments, if any, on this post below this post.

Open system vendors are at least partly responsible for the inability of banks to shutter down their legacy systems:

6 Reasons Why Banks Can't Transform Legacy Applications

Why Banks Can't Transform Legacy Applications - Part 2

On another note, we've been hearing about shared service utilities for KYC, AML, etc., for several years. IMO talk will turn into fast-paced action only when a central agency - aka "scheme" - takes the initiative to set up utilities. On the face of it, this should be a great opportunity for fintech but fintech nowadays seems to require VC funding and VCs are loath to fund B2B startups, which is what this would be.

My definitions of disruption, who's disrupting whom / what, etc. are all unchanged from the previous contexts in which I'd used them viz.:

"None of this sounds like disruption of banks by fintech." ; "I draw a line at threatening the death / disruption of your customers."

Re. my comment "I'm sensing a common belief that use of mobile banking, PayPal, SQUARE, ApplePay, etc. means disruption. I totally disagree.", Chris Skinner's blog post - "Fintech is not disruptive, as banks adapt and thrive" - would seem to agree: 

"In fact, the more I think about things the more I realise that most fintech is supplementing the bank industry rather than disintermediating, disrupting or displacing it. P2P is just acting as the credit risk department of financial institutions; Square is just an SME acquirer on behalf of card companies;..."

As for Chris Skinner, who was the other person called out by Chris Yaldezian above, just the title of his FSClub blog post - "Fintech is not disruptive, as banks adapt and thrive" - says it all but the leader to the article is very enlightening:

"In fact, the more I think about things the more I realise that most fintech is supplementing the bank industry rather than disintermediating, disrupting or displacing it. P2P is just acting as the credit risk department of financial institutions; Square is just an SME acquirer on behalf of card companies;..."

The whole article is worth a read - it contains interesting passages from an FT article viz. "Bank disrupters fail to live up to hype"; "We are so far into the hype that, even before we have seen much realisation of the potential, there are bubble warnings.”

Cut through the hype, think about things, it'll become obvious that (a) many purported disrupters have actually helped boost revenues of banks rather than disrupt them (b) not too many purported disrupters will be around if and when the bubble bursts.

TY for clarifying but competing with your customers is also not an uncommon business practice. I've come across it in various industries where a single company changes its position in the value chain from one deal to another e.g. investment banking (buy side, sell side, merchant banking) and engineering (manufacturer, bought-out supplier, prime contractor, sub contractor).

I draw a line at threatening the death / disruption of your customers. Call me old-fashioned but that's a terrible way of doing business. I know many neobanks / finsurgents do that. But, thankfully, at least some of them seem to have realized the folly of their ways, going by a few quotes of their CEOs in the WSJ article I cited above e.g.: 

QUOTE

Brett King, CEO of mobile-banking app Moven, wrote in 2010 that “the death of retail banking is here.” Now, Mr. King counts meetings with potential bank partners among his biggest priorities.

ENDQUOTE

• It's hard for a technology company to develop the capability to maintain accounts, receive customer payments, make salary and vendor payments, etc., on its own. So, it partners with a bank to hold its money.
• It's hard for a retailer to develop the capability to manufacture engines, chassis, plan routes, etc., on its own. So, it partners with a transport company to move its goods.
• "AirBnB is the world's largest hotel chain but it doesn't own a single hotel".

I could go on and on but it's common for a company in any industry to partner with external entities EVEN TO ACQUIRE A CAPABILITY THAT LIES AT THE CORE OF ITS BUSINESS. 

If it's not great business design for banks to partner with external entities to acquire a capability to expand into a new realm (construction), then I don't know too many examples of a great business design in any industry.