3 ms·

"I'm not denying banks need to step up their game, after all it's nearly 2020. But personally I think the reason it won't matter is most of them won't be around

by astine 7y ago

"I'm not denying banks need to step up their game, after all it's nearly 2020. But personally I think the reason it won't matter is most of them won't be around long enough - they're in for a world of painful disruption from the likes of Stripe, Apple, Google, cryptocurrencies, Libra-like instruments, peer-to-peer services and micropayments, etc. and who-knows-what other big innovations about to be invented by geniuses from areas of the world presently starved for financial services." I'd be surprised if these services actually disrupted the banking industry. Banks are heavily regulated, and with reason. The moment any service starts to step onto bank turf, they're going be subject to the same regulations and will have to effectively become a bank as a result. What's more, these services don't address the social role that banks play where they enable governments and large business to function by loaning them money. Or the economic control function that banks play. Banks will remain in existence for generations to come.

rkagerer 7y ago
You raise some good points, and I agree it will take ages before the existing institutions die off. But the internet has transformed (or is transforming) nearly every other industry. Television (Netflix), retail (Amazon), transportation (Uber, eventually perhaps Waymo), communication (Gmail, Slack) etc. I think banking is up next. It's a ripe combination of innovation lethargy (the ancient, outdated tech is just one symptom), a customer base unsatisfied with the user experience, insipient poor judgement or corruption (to the point we've actually bailed them out to keep malfunctioning ones alive instead of letting market forces do their thing), comparatively fat margins supporting intrinsic inefficiency, and more. Some of the peer-to-peer techs (eg. decentralized Smart Contracts maintained by developers in permissive jurisdictions) will bypass regs for a while or limit enforcement to the on/off ramps - at least long enough to demonstrate alternative models (the way Napster did). Eventually new startups will offer the most appealing benefits in a legit, scalable, compliant way and run circles around the old institutions. At least, that's the broadcast today in my crystal ball ;-).

by astine 7y ago

rkagerer 7y ago

You raise some good points, and I agree it will take ages before the existing institutions die off. But the internet has transformed (or is transforming) nearly every other industry. Television (Netflix), retail (Amazon), transportation (Uber, eventually perhaps Waymo), communication (Gmail, Slack) etc. I think banking is up next. It's a ripe combination of innovation lethargy (the ancient, outdated tech is just one symptom), a customer base unsatisfied with the user experience, insipient poor judgement or corruption (to the point we've actually bailed them out to keep malfunctioning ones alive instead of letting market forces do their thing), comparatively fat margins supporting intrinsic inefficiency, and more. Some of the peer-to-peer techs (eg. decentralized Smart Contracts maintained by developers in permissive jurisdictions) will bypass regs for a while or limit enforcement to the on/off ramps - at least long enough to demonstrate alternative models (the way Napster did). Eventually new startups will offer the most appealing benefits in a legit, scalable, compliant way and run circles around the old institutions. At least, that's the broadcast today in my crystal ball ;-).