I have witnessed two banking crises, the passage of numerous banking laws and significant industry consolidation. But the rapid growth of competition from financial technology firms may be the greatest threat to the traditional banking industry that I have seen in my career.
Success in navigating our on-demand economy, which uses technology to deliver goods and services in a speedy fashion, will determine whether community banking thrives or goes the way of the local bookstore or video rental shop. All banks should be thinking hard about who their customers are today and who they are going to be in the next five to 10 years.
While the growing banking technology revolution has the potential to favor larger banks, this is not always the case. Many of the new products and innovations available by banking partners and fintech providers, particularly in such areas as mobile banking and payments, are available as hosted or managed services, or deployed via cloud technology. These solutions are now available — and largely affordable — for financial institutions of all sizes, and can be deployed rather quickly. This presents promising opportunities for small and midsized institutions, and an ability to compete quite effectively with larger FIs.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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