Disrupted but not destroyed by technology

The “Uber moment” for banks is coming

Music, cable television, movies, photography, transportation, communications and publishing are all industries that continue to experience massive disruption brought on by the advent of technology. Spotify, Tidal and iTunes are making CDs obsolete. Netflix turned Blockbuster into nostalgia.

Banking is reaching its “Uber moment” as technological advances will lead to hundreds of branch closures and a possible halving of people employed in the sector, the former chief executive of Barclays has warned.

Disrupted but not destroyed by technology

In a speech reported by Reuters, Antony Jenkins described technology as an “unstoppable force” that would lead to better customer service and a wave of new banks becoming household names:

I’m predicting that over the next 10 years, we will see a number of very significant disruptions in financial services — let’s call them Uber moments – driven by companies in the Fintech sector.

The number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20%.

Technology is disrupting the financial services industry

That’s in line with an analysis from Citi that predict a 40% to 50% staff reduction from pre-crisis highs:

Banks’ Uber moment will mean a disintermediation of bank branches rather than the banks themselves. Specifically, it will mean the shift to mobile distribution being the main channel of interaction between customers and the bank.

While banks themselves will not be destroyed, their branches will as new technology enables them to do more online or via mobile. That means that there will be less need for bank branches, and the people who work inside them.

The pace of change will be slow enough

The pace of change will be slow enough that the traditional players can co-opt, whether it’s through building, buying or partnering, and acquire the technology disruption. But don’t wait to long!

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