Curating the daily news recently, I was surprised to see an article published by Wharton Business School that irritated me. Wharton Business School is one of America’s Ivy League Universities up there with Yale and Harvard. It should be publishing informed insights, but this post was more of a headline grabber from Scott A Snyder, chief innovation officer at venture capitalist firm Safeguard Scientifics, and a senior fellow at Wharton’s Mack Institute for Innovation Management. Scott’s thesis is as follows:
[Bank] executives believe digital disruption will drive 40% of companies out of the top 10 in the next five years. As Antony Jenkins, former CEO of Barclays, aptly put it in a 2015 speech: “Over the next 10 years, we will see a number of very significant disruptions in financial services, let’s call them Uber moments” …
Some analysts believe Fintech disruption could take as much as 10% to 40% of bank revenue and eliminate 1.7 million banking jobs by 2025. Couple this with increasing regulation, historically low interest rates, and the fact that most (73%) millennials would prefer to get their banking services from a non-financial services company, and banks seem to be headed the way of Blockbuster.
The article continues …
Despite being one of the top sectors for technology investment over the last two decades, including the creation of major products such as ATMs, debit cards, credit scoring and check scan and deposit, banks are lagging other industries on digital transformation such as those in retail, transportation and even healthcare.
The good news is that banks are still very well-positioned to win with the new wave of empowered digital customers given their rich historic data and balance of physical and digital touchpoints. But it will take a strong commitment to a customer-centric vision, a two-speed business model and agile infrastructure to enable “Big I” innovation, and a data-driven approach to delivering personalized, relevant banking experiences.
For bank executives, it’s time to decide if you want to be Netflix or Blockbuster. Your customers won’t wait forever.
A few things we do know
Now there is some decent insight in the article, but the reason it irritated me is that it follows so many articles over the past few years that claim banks will die, just like Nokia, Kodak, Blockbuster and more. They won’t. I write about this regularly, but this blog from two years ago gives the puzzle as to where we are today, and why this idea of banks on the precipice is so irritating.
The question is, who’s right? Are the digital bankers screaming and shouting that we’re going through a banking Kodak moment, or are their senior management right in saying we only need to change at the speed of the fastest competitor?
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main image: DenyDesign, Shutterstock.com