How Digital Will Change Banking Forever

Internet banking revolution

It’s no secret that banks have had a hard time of it recently. Since the financial crash of 2008 many have been burdened by huge levels of debt, and new government legislation across the world has changed the ways they can operate.

Many banks have been historically slow to adapt to changing technologies, and although online banking is something we all take for granted, far larger changes are on the horizon for the entire financial services sector.

The whole banking industry, like the music industry, is one which is very easily switched to being digital only. We have all see what has happened to companies like HMV and Waterstones as we switch to buying music and books online and new business models in the banking industry could mean that major banks risk the same fate.

Innovation is required to ensure that banks survive in the years to come, but there are two main barriers to this.

Firstly, banks themselves are very anti-risk at the moment and don’t like to take risks on anything which may not work. Secondly, banks work within a very strict framework of regulation which severely limits the new sorts of business models which they can adopt.

Companies like PayPal have no financial services market, but their understanding of new technologies and the way in which consumers want to do business has meant they have had a huge impact on the marketplace. We are likely to see more of these sorts of ventures in the future.

Banks can compete, as long as they do not get left behind and start to offer innovative products and services and allow customers to access their bank any time, any place through the use of smart phone apps or other online services. The quantity of big data which banks have at their disposal should help with success, but the drive to innovate has to start at the highest management levels.

Source: Standardchartered

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