An industry survey that covered 150 executives and investors in the banking sector has revealed that Fintech startups are only causing limited disruption to the industry rather than the dramatic, industry-defining shakeup of an ‘Uber Moment’.
A new survey conducted by Autonomous Research has revealed that 14% of banks face a significant threat by Fintech innovations such as bitcoin’s blockchain and similar distributed ledger technologies. Other figures show 44% of 150 investors and banking industry executives believing ‘selected disruption’ in certain sectors while 41% are of the opinion of some startups making an impact while nothing others will have none.
As reported by Bloomberg, the survey also revealed the companies who are likely to ride the wave of Fintech and even benefit from new technologies. The survey also notes a significant U.S. card-issuer to be among the biggest losers if disruptive technologies reach their potential.
Although a significant majority of those polled see disruption having some effect in the industry, the underlying belief is that established giants will co-exist alongside disruptive technologies or even gain from it. A notable example of such an endeavor would be the collective investment from global banks to tap into distributed ledger technology, the decentralized mechanism that supports bitcoin – the blockchain, with the R3-led private blockchain consortium.
In an interview with the publication, Brian Foran, Partner at Autonomous Research covering Universal and Regional Banks said:
Technology doesn’t move as fast as people think. 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.
The respondents of the survey picked out JPMorgan and Goldman Sachs as the two banks to gain from blockchain technology replacing traditional banking practices, a move that will see lowered costs and improved efficiency. JPMorgan has actively invested in the blockchain space, now a partner at the R3-led private consortium and the IBM-led open-source blockchain effort – the Open Ledger Project. Goldman Sachs recently filed a patent for its own cryptocurrency called SETL Coin. MasterCard Inc. and Visa Inc. are also deemed winners in an age when micro-payments and instant mobile transactions become the norm.
On the flip side, American Express Co. is seen among the most vulnerable of companies likely to lose ground due to Fintech-led disruption. 2015 has been a year that has seen the credit-card giant’s stock dip by 25% with the loss of Costco as a partner said to be significant to the company.
Remittance powerhouses Western Union Co. and MoneyGram International were also labelled losers with the advent of low-cost remittance systems and alternative currencies such as bitcoin gaining traction through adoption.
Furthermore, 2016 is seen as the year when banks implement blockchain- and mobile-based pilot programs that could significantly change the banking industry, with blockchain specifically seen as the most influential new technology, according to the survey.
Speaking to Bloomberg, Foran added:
Most banks have a goal of launching something in 2016 as a proof-of-concept. They’re all quite narrow in terms of their ambition – stuff like transferring money, branch-to-branch within the bank, or maybe creating the ability to settle a single type of asset class, just to see how it would work.
In contrast to the survey, a former CEO of Barclays, the second biggest bank in the UK by assets, recently spoke about the banking industry facing a number of ‘Uber Moments’ in the coming decade. Former Barclays’ CEO Antony Jenkins spoke recently about Fintech significantly disrupting the banking sector within the next ten years.
In a speech at the time, he stated:
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.
He also boldly claimed:
I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% in the next ten years. Even in a less harsh scenario, I expect a decline of at least 20%.
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Last modified: June 10, 2020 1:51 PM UTC