Not fade away
For years we heard of how fintech was pushing banks to the precipice. It’s now clear something different is happening. Banks, like they have done throughout history, are instead changing in line with customer needs and market expectations.
Consortiums including banks are launching technology to remake processes which are hundreds of years old. Proof of concepts are now becoming commercialised and rolled out at scale. All over the world banks are embracing machine learning and artificial intelligence.
This is not the end of banking. Banks are simply morphing to embrace the new opportunities presented by technology – including ones nobody saw coming.
So will banks even be recognisable in the future? I think so. At the end of the day banks are still going to be a regulated entity – whether they call us ‘banks’ or something else, we are still going to be the core lynchpin in providing financial stability for governments, in turn supporting social and economic stability.
And if we are not called ‘banks’, we’ll still be helping customers - whether they be companies, super funds, other banks or individuals – manage surplus deposits and help secure and grow those funds. And we’ll still be helping those with a shortage of capital to support their business or personal needs.
It’s a cycle that is not new. Banks have been around for hundreds of years and have always adapted. This comes in contrast with the general perception of banks as big organisations that are slow to adapt.
Banking is an industry that has adapted incredibly well over time. There are plenty of large consumer brands which disappeared into the aether because they failed to adapt – either due to changing customer expectations or new competition displacing their core value propositions.
But banking has continued to evolve with the underlying needs of society and has been able enhance its CVP by either collaborating with or learning from competition.
The role banks play has and will always change in response to community demands. But that core role of safety and trust is an unmoveable part of that role – and I can’t see that changing in my lifetime.
What will change are the other players in the space. By no means do banks have our head in the sand - at Sibos in 2018, ANZ CEO Shayne talked very clearly about the path banks are taking. The reality is banks can't do everything in their own right and the pace of change means developments are happening faster than ever before.
There will be innovative solutions society wants that banks can’t or won’t provide. That’s where fintech will play a vital role – with the help, of course, of banks.
A huge opportunity for both banks and fintech exists in traditional incumbents assisting startups and disruptors to navigate the complex regulated banking environment at scale to reach the end customer.
For banks, being negative about disruptors and saying ‘it's not going to happen’ or ‘we can beat them’ is the wrong way to think. Every one of these disruptors is an opportunity. The mindset needs to be partnerships over proprietary thinking, and leveraging those partnerships to drive better outcomes for all stakeholders.