Banking Fintech

Banks are not dying

Banks are not dying. Image: Cartoonresource, Shutterstock.com
Written by Chris Skinner

Chris Skinner argues the case that banks are not actually dying, and fintech isn’t actually disrupting them.

I was having a nice relaxing Sunday, when I was alerted to a tweetfest taking place between industry heavyweights Simon Taylor (an ex-banker) and Mariano Belinky (a banker). It all started with:

Soon, others joined the conversation, such as Ajit Trapatha (a consultant):

… and Jason Bates (a neobanker):

… and Brett King (not sure what he does ?):

I’d love to give a heads-up for other participants, but then this blog would be just one long series of embedded tweets. Instead, I relaxed, marked the conversation to “blog about it” and snoozed off to the snarkiest programme on TV, Come Dine With Me.

Now it’s time to talk a little about my take on this. First, I’ve blogged about fintech and banking lots already:

The conclusion that’s clear is that banks are not dying and fintech is not disrupting them. Instead, fintech is supplementing banking and reaching areas that banks don’t serve well, such as small businesses. The supplementary piece is in the areas of connecting people and machines peer-to-peer, to create a new network of value exchange. That value exchange structure is going to have billions of devices (about 50 billion+ by the end of the decade) transacting trillions of transactions in real-time 24/7/365, for amounts that will often be worth less than a cent.

That’s the new ValueWeb we’re becoming more familiar with, and is based on a lot of new technologies working on the banking rails.

Real-time world

The banking rails also need to change, as they offer a pure cross-border payments infrastructure and that’s not what people want in the internet age. Equally, banks must reconsider their role as a monetary store to a value store. The difference is subtle but key, as money and payments are not the future internet of value. It’s also photographs, memories, ideas, stories, words, friendships and anything else that’s of value to you; me and our globally connected real-time world.

In other words, banks are still a core foundation of the next generation of value stores and value exchange structures, that include a lot of new players. Players who offer functions and processing as a business (Stripe) of value marketplaces where banks are a key platform player (see more here).

This means that banks do need to adapt to be a player in this new tech world, but then most have had to adapt to be part of the new tech world. That means both Simon and Mariano are right. Simon’s right because banks need to adapt and change, or die. Mariano’s right, in that most fintech isn’t threatening banking, but supplementing and assisting in making it easier to do across borders, globally, in an extended value exchange and store structure.

‘Nuff said.

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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Image: Cartoonresource, Shutterstock.com

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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