Banks no longer in control of their own destiny - EIU

By 2020, bankers expect the financial services industry to be shaped strongly by technology and non-traditional competitors who are expected to gain ground in key markets including payments, lending, and wealth management.

2 comments

Banks no longer in control of their own destiny - EIU

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The Economist Intelligence Unit surveyed the views of 203 senior retail bank executives to world over, to gauge their views on the future of their business and potential areas of disruption from new market entrants.

Bankers polled predict that retail peer-to-peer (P2P) lending will be available via banking platforms (65%); retail banking will be fully automated (64%); and more money will flow via fintech firms than traditional retail banks (57%).

They see the industry under attack from all quarters, with Apple Pay and other computing behemoths seen as a potent threat by one-in-five, while a further 20% expect the upheavals to flow from other non-bank competitors who have yet to fully emerge.

Bankers see three main areas that they must change in order to survive: adapting the role of the branch network (36%); getting the right talent (35%); and modernising their technology (31%).

Monica Woodley, the editor of the report, says: "The true winners will have the technology to cope with co-operation. Security and integrity will be as important as cost, efficiency and speed. But even the winning banks could be reduced to a mere screen icon for many customers, becoming the trusted platform via which consumers access a range of services from third-parties like fintechs."

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Comments: (2)

Gerard Hergenroeder Retired IBMer and Banking Executive at Payments Shark

I am not buying any of this! 99% of the Fintech start-ups will fail in the next three years. Who are consumers going to trust, some no name under-invested "Fintech" or a trusted well capitalized bank.

This does signal the fact that banks need to invest in their future which they will do. At the end of the day Fintechs will not be banks, and banks will continue providing trusted advice, loans and deposit services. The money is not in the technology; it is in the services. But, technology is required to improve service offerings and experiences.

Every ten or so years banking goes through an investment cycle as technology advances enables new and better ways to do the same old stuff. The key for a bank is not to believe all the "hype", but make strategic investments that create lasting value for consumers.

Russell Bell Director at Fastbase Ltd

There's a good chance we'll see the development and wide adoption of a service model where you don't have to trust the provider.  Not for deposit-holding services obviously, but for payment services. That's assuming it proves practical to un-bundle payment servives from deposit-holding services.  Trustless providers would inherently have a lower cost base and be more competitive.

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