Ex-Barclays boss Antony Jenkins has warned established banks that they could be in a “world of very slow decline” if they failed to adapt to new technologies.
Speaking to City A.M., Jenkins said “this industry is really on the brink of having to undergo radical transformation if it’s going to remain relevant to its customers.”
Jenkins highlighted how the explosion of user-friendly fintech firms had transformed the banking landscape. He also predicted that the entry of big tech firms into the market, such as Apple and Amazon, would put banks under pressure to adapt to remain competitive.
According to research by fintech firm 10x, founded by Jenkins, 20 per cent of customers who left their bank did so because of poor customer experience.
The research shared exclusively with City A.M. – which surveyed over 150 banks leaders and more than 150 managers in eight different markets – shows that bank leaders around the world are aware of the scale of the problem, with nearly two thirds of leaders suggesting they have further to go on embracing new forms of technology.
The same proportion admitted that their slow rate of digital transformation has directly resulted in them missing out on new customers.
As Jenkins argued, “these issues have moved from something that sat largely inside the technology department to something that has become a strategic issue for banks.”
But the research also suggested that banks would struggle to hold onto their staff if they failed to upgrade fast enough. 94 per cent of managers surveyed said they would leave their current position to work for a competitor bank with better tech.
“If you’re a product manager in a bank or responsible for a segment like small businesses, you’re tearing your hair out because you just don’t have the tools you need to compete,” Jenkins said.
“The next 5, 10, 20 years for banks is going to be defined by their ability to implement new technologies…the senior leaders can understand that intellectually, but they don’t get it viscerally.”
Although Jenkins did not think that banks were “the dinosaurs roaming the savannah that they are sometimes painted as”, he warned that without fundamentally changing they would face “slow decline”.
He suggested that banks would either have to fundamentally redesign their in-house technologies from the ground up or operate on a ‘Banking as a Service’ (BaaS) model, where they are effectively pushed down the value chain.
“The danger is that if you don’t pick one of those two models – and then execute really well against it – you could be in a world of very slow decline,” he said.
10x, which was valued at around £600m at its last funding round, offers cloud-native core banking services which it argues can address these problems by enabling a faster and simpler roll-out of digital products.