Is the Banking Industry Living on Borrowed Time?
In 1997, Bill Gates predicted the eventual demise of banking when he said, “We need banking but we don’t need banks.” Are we reaching the point where Gates’ vision is realized? Could we see the end of banks as we know them in the next 20 years... or maybe the next five?
By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking Report
The banking industry is being attacked by a growing number of FinTech startups and digital companies who are working to capture market share from traditional players. To survive, traditional banking organizations need to evolve quickly, according to new research from digital innovation agency Adaptive Lab.
Based on this research, carried out for a new book called Bye Bye Banks?, written by James Haycock, and co-authored by technology reporter Shane Richmond, despite the fact that banks are spending billions of dollars on digital transformation and innovation activities, changing the entrenched culture within these organizations is very difficult. The extensive qualitative and quantitative research for the book stems from discussions with 110 senior managers, directors, C-Level executives, CEOs and Presidents within the retail banking sector.
“The financial services playing field has been changed irreversibly in recent years by a new generation of companies and leaders who have torn the rulebook to pieces, adopting new technology, introducing new working practices, and serving customers whose lives are increasingly orientated around their mobile phones”, says the research. Thanks to the expansiveness of the web and the accessibility of the smartphone, digital disruption is happening all around us, breaking dominant business models in retail, entertainment, travel and telecommunications.
Beyond well-known disruptors such as Amazon, Uber, PayPal, Skype, Spotify, WhatsApp, Netflix and Airbnb, there are even more smaller start-ups hoping to transform traditional transactions, companies and even industries.