We’ve seen digital technology disintermediate everything from record companies to university curriculum. Yet banking has remained rather immune to all this disruption.
Sure, ATMs and online banking may threaten the bank teller’s union, but central banking’s monopoly over money has hardly budged. Just like we have to get our food from real plants and animals, we have to get our money from real banks. Or at least it appears that way to most of us.
However, the rapidly changing digital economy is about to give banks a run for their money. Literally. But if they learn to work with, rather than against, the new role of money in a peer-to-peer landscape, they may just come out of this on top again — or at least working side by side with the communities they should be hoping to serve.
Various Internet-based business models can offer new opportunities for financial institutions, consumers, and alternative service providers. Financial institutions should be mindful of this fact as part of their competitive analyses and strategic planning efforts.
While it might be premature to say that new business models can easily replace banks and credit unions for most of consumers’ banking needs, financial institutions need to keep abreast of competing technologies and business models, and be aware of potential substitutes for existing products and services.
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