Technological change is intensifying and competitors are everywhere
The millennial-led shift toward new digital financial services threatens to upend the consumer banking industry. The popularity of the services has left the many banks rushing to adapt. If the banks fail to meet the challenge, it may allow part of their industry to be forever taken away from them.
The banking future is distributed. Banks are facing a swarm of new tech businesses eating away at their businesses
The problem? Financial technology, better known as fintech. A new wave of tech-savvy startups that can do things better, faster, and cheaper than the big banks will disrupt their traditional businesses like lending, payments, and wealth management. So banks are facing a swarm of new tech businesses eating away at their businesses.
The relationship with the financial system is changing – it’s an electronic one, on smartphones. That can and will be very disruptive to the banking system. It’s both an opportunity and a threat.
Money is pouring into so-called fintech start-ups. And major technology companies are all entering consumer banking, typically starting with digital payment apps.
The migration to mobile computing may well work to the advantage of the digital-only entrants as people of all ages become more comfortable using a smartphone as the remote control for their finances.
Steps to address the new reality
In Denmark – 5.5 mio inhabitants – MobilePay is riding a surge of popularity.
Danske Bank created MobilePay to address the need for very simple money transfers. The ambition was to make transferring money to friends and businesses as easy as it is to send a text message. On 7 May 2013, this ambition was released with the launch of the MobilePay app. More than 2.7 mio. Danes are now using the app. and about 70% of users are customers at other banks than Danske Bank.
A nightmare vision for the future of banks
The big question, is whether the traditional banks can move fast enough to get ahead of the wave of change – or at the very least ride it.
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