Last week, we posted a few thoughts on how fast the banks are really going. Over the past week, it seems my newsfeed has been flooded with predictions on the life of the bank as we know it.
And the predictions are all over the place.
The ‘Banks Will Die (Unless They…)’ School
- McKinsey just released a report on the short-term future of banks, and sees them with the choice “between taking on new entrants through smarter use of their vast data resources and transforming their brands, or by forging alliances with startups”.
“Banks must decide soon, probably within three years, or the choice will be made for them.”
- In terms of small banks, some say that they need to really up their game to stay afloat. With 90% of US banks under $1billion in assets, this a pretty large number of banks.
“We need perspective on how to muster the personnel to monitor, assess and adjust our digital marketing programs and make sure they are compliant with regulatory standards. Community banks need information like this to keep their doors open.”
- In order for banks to not write their wills, they need to start thinking of themselves as technology companies first, so says one watcher.
“Banks need to start thinking and working like technology companies, and use innovative thinking and big data to better understand their customers.”
The ‘Banks Will Survive’ School
- Some think adaptation will come, even to the point where branches won’t decline (too much).
“Even in the 21st century, bank branches continue to provide vital services, typically ones that are much harder to give via the internet or over the phone.”
- One has said that FinTech startups’ narrowly focused solutions will prohibit them from taking over the consumer base (not that they’re bad….).
“The reality of the banking industry in the US, however, is that there is no startup truly pursuing a full stack strategy. As a result, dire warnings that banks will go by the wayside are totally ridiculous (the US government is way more of a threat to banks than any fintech startup is).”
- Instead of being disruptive, could blockchain actually maintain banks hold on the space?
“The ability to offer financial products and services in real time globally at reduced costs could actually catapult traditional banks back to top spot in the race to devise financial innovations.”
- Technology could allow banks to reach their customers easier (after a lot of work!), as opposed to taking them away.
“In this age of the empowered customer, those banks which embrace the latest digital strategies will ultimately be the ones who deliver most benefits to their account holders, reaping the benefits of their investments.”
- One frequently cited “safety net” that banks have to their advantage, and one that’s suggested to keep them alive, is control and regulation.
“But the key issue here is the payment system. Because they control it, banks enjoy their greatest hold over consumers, and also their privileged position with politicians and regulators.”
A summary? Banks might not die, but they’ve got a lot of work to do.