Imagine a world where salaries are paid into a Google account. Banks must find a way to adapt
That was the headline for an article in the FT yesterday (7th May 2015) and I am hugely excited about what this means for the growing FinTech sector.
Reporting on the fact that GE, the US industrial group, is planning to sell most of its financial services arm over the course of the next two years, the article posed the question about the future for those financial services businesses that don’t want to quit the sector.
I was particularly interested in the views of Andrew Dawson, head of the financial services strategy group at PA Consulting. First of all he believes technological change has altered customers’ expectations of their relationship with their banks. He also cited the demographic change that is bringing new and younger customers into contact with financial services companies, forcing change.
The majority of banks seem to be slow in implementing technologies that are capable of meeting customer demands. This means that FinTechs offering faster, cheaper payment solutions can capitalise on the gap left in the market by the larger, established financial institutions.
Customers’ expectations have been met, to some degree, with a rise in the number of banks now providing smartphone apps enabling them to make payments and transfers on the go. And the introduction of services such as Google Wallet and Bitcoin could well mean that in the not too distant future, the lines between technology and the financial sector will not just be blurred – but will become one and the same.
Ultimately, if banks cannot keep up with a world in which customers expect to be able to access and manage their finances instantaneously, there is no doubt that they will lose out to FinTechs.
The FT article may be focusing on personal banking – but the changes are equally important, if not more so, for business banking. And that’s what the FinTech businesses that we are talking to are thinking about. It’s not just about enabling digital transactions – but removing the barriers that slow down those transactions.