The scope and speed of evolution in regulation, customer behavior and technology – coupled with the emergence of new competitors – mean that the future of banking will not be a continuation of the past. New technologies will transform banking as we know it, providing both opportunities and challenges for financial institutions.
A decade after the financial crisis, the near-collapse of the economic system is fading from memory. But, while the banking industry has largely recovered from a financial perspective, there are storm clouds on the horizon. While capitalization has improved significantly, revenue growth has become more challenging with the strategy of cutting costs having run its course. At the same time, banks and credit unions are playing catch up from a technology perspective at a time when consumer expectations are increasing exponentially.
Making the banking business even more difficult, smaller fintech and large techfin companies are developing solutions that use insight and digital technology to improve the customer experience across product lines. These new competitors threaten legacy financial institutions of all sizes. According to various consultancies, new players could capture up to a third of incumbent banks’ revenues in the next 2-3 years. Failing to respond could lead to the demise of less agile organizations.
The good news is that many of the new technologies that are threatening the banking industry also present significant opportunities. In fact, those organizations that can leverage big data, advanced analytics and new technologies to improve the customer experience can build trust, loyalty and revenues that are the keys to success in the future. According to Dan Cohen, Senior Vice President, Global Financial Services and Insurance at Atos, “Banks are at a crossroads. Continuous finTech innovation and new technologies such as blockchain are disrupting the market. While it creates threats, it also opens multiple opportunities for financial services to reinvent themselves and thrive.”
Read more here