Are we gradually steering towards a world without banks? It might seem like a striking idea at first, but it is probably not as far-fetched as it might seem. Indeed, such a notion would not necessarily mean an end to intermediaries between customers and providers, but it could well mean that those intermediaries will have undergone such a profound transformation that the classic notion of a “bank” will have disappeared completely within the next few decades.
The winds of change are blowing right across the financial landscape, with the continuing march of fintechs and the emergence of new players on the market, whether as competitors, collaborators or strategic partners. But as well as this, the opportunities for financial services providers are growing all the time to the point that they put into serious doubt the role of banks as an unalterable interface between individuals and their capital.
Until now, banks were understood to be a centre for deposits and loans, relying on the mutual trust that savings will be protected and associated obligations will be met. But in a fast-moving market that, paradoxically or not, is moving in parallel with a pandemic, as we move towards the light at the end of the tunnel, it could become impractical, if not unfeasible, for banks to provide the full range of financial services that a customer could possibly need.
A recent study published by the prestigious newspaper The Economist has looked at the future of the banking industry in depth, and we would highlight, in particular, a special report entitled “How Fintechs Will Eat into Banks’ Business”. As well as being an excellent read, the piece also includes some key data about these new players, and as usual, we have compiled the most relevant points in a format that regular GDS Modellica readers will already be very familiar with: an infographic.
The study examines in great detail how the influence of non-bank financial companies is growing, making the balances that banks use to support loans less valuable. Alongside this, big tech companies are using the competitive might of their platforms to start making inroads in the banks’ main business. As the report bleakly puts it, “It is as if the entire industry were in a pincer grip that might one day kill it”.