Step forward Anthony Jenkins, the ex-Barclays banker who reiterated last week that banks are facing their ‘Uber moment’. That’s a tantalising notion for some – the idea of blisteringly innovative, agile new businesses sweeping away the old guard.
And there’s certainly substance to his suggestion that automation will be a challenge for banks in the years to come. Our own research earlier this year found that bankers believe the fintech revolution will bring an end to branch-based banking – and most predict that retail banking will become almost fully automated by 2020.
Read more: Fintech is coming to take your banking job
It’s a clear digital shift, but those views highlight why an ‘Uber moment’ isn’t on the horizon: the industry knows the change is coming. Jenkins has found himself a great soundbite, but you could suggest Uber is a simplistic comparison that relates to a very different industry – one that was less prepared for wholesale disruption, and had less time to react.
Banks have been overhauling their technology infrastructure for years, and we are already seeing them respond to these threats – almost all of the banking giants now run fintech startup incubators and are actively testing testing new financial technologies.
Let’s be clear, the sector is under pressure. For traditional banks, profits haven’t recovered from rebuilding balance sheets after the 2008 economic crisis, and technology juggernauts like Apple and Google are entering the fray. By March, PayPal held over $13bn (£9bn) of customer money in accounts – more than all but 20 banks in the US.
That’s significant, but the Silicon Valley success story doesn’t have the powers or the regulatory approval to offer more mainstream banking services – and it generates revenue when that money moves around, not when it is held.
We have seen good progress from forward-thinking incumbents, too. Spanish bank BBVA reported a 10.9 per cent increase in gross income to €23.68bn (£18.66bn) for 2015, attributing the rise to its digital programme. It said 19.2 per cent of consumer loans in Spain last year were made purely through digital channels, double the previous year.
And just last month City A.M. reported that Santander is already using blockchain technology – a remarkable feat, given how nascent that technology is in the context of the industry.
Ultimately, banking customers will determine who wins this war. They will decide whether new challenger banks are as trustworthy as high street giants, and whether new financial technologies offer tangible value or are merely gimmicks. And in the meantime, perhaps more emphasis should be placed on nurturing the technological skills of current staff and new recruits.
Banks can avoid their Uber moment and embrace the staggering potential represented by technology – but only if they have the right people with the right skills to deliver on its promise.