Banks are in a continuous state of transformation in response to changing consumer trends. To suggest that they are going to almost entirely cease to exist within the next two decades is simply playing into the hands of those trying to create an investment frenzy. There are some incredible technology businesses that are quickly creating products and services seeking to disintermediate banks from their customer relationships – their presence and progress are absolutely a catalyst for change. However, retail banks are investing heavily in new technologies and will be motivated further by the impending revised Payment Services Directive regulations. We have been working with retail banks for over a decade and already see them starting to adopt agile, two speed technology development on the edge of their big legacy systems. As a market, it is no way immune to disruption, but banks play a very important role safeguarding our money in a regulated and secure way. I will eat my bitcoin if they’re not around in 20 years.
Bill Blain, a strategist at Mint Partners, says No.
Most banks will vanish – it’s what replaces them that matters. Financial evolution means today’s “champion” banks are doomed. Too many are financial dinosaurs with layers of flabby management, heritage systems that have been cobbled together over decades requiring IT archeology to operate, and business models that simply don’t work. They’ve been regulated out and face unworkable capital rules. More nimble, fleeter modern financial institutions will replace them. They will be smaller – therefore not frightening regulators as “systemic” risks. They will be technology savvy, with state of the art digital offerings. They’ll be proper, lean, mean, businesses that are part of the economy rather than considering themselves above it. The trick is determining who they will be: smart banks that are self-evolving today, new fintech platforms that successfully disrupt the current model, and non-banking lenders moving into the space with better ways of doing it. It’s going to be fascinating. And I might delay my retirement to see it happen!