The former Group CEO of Barclays, Antony Jenkins, predicts a future within the next ten years wherein financial technology or fintech will substantially disrupt traditional banking systems and the banking industry as a whole. He is convinced banking installations and those employed in banking institutions will be reduced by at least 20% in the coming ten years, if not up to as much as 50%.
Antony Jenkins, former CEO of one of Barclays, the UK’s second biggest bank in assets after HSBC has predicted an “Uber-like” disruption from the Fintech sector to come crashing down on the current banking industry.
[I’m] a passionate believer in the transformative power of technology. It is an unstoppable force, which often has a hugely positive impact in the way we live and work.
Noting that the current banking industry and financial services have not always delivered its side of the bargain for the functioning of a healthy society, he added:
I’m predicting that over the next 10 years, we will see a number of very significant disruptions in financial services — let’s call them Uber moments – driven by companies in the Fintech sector.
Jenkins was giving his speech titled – Approaching the ‘Uber Moment’ in Financial Services’, at the Chatham House, the Royal Institute of International Affairs in London, which is an independent policy institute.
We will see massive pressure on incumbent banks, which will struggle to implement new technologies at the same pace as their new rivals [from the Fintech industry]. That will make it increasable challenging for them to deliver the returns and profitability that their shareholders demand.
Looking at it as an inevitability, he added:
Ultimately, those forces will compel large banks to significantly automate their business.
Significantly, he boldly claimed:
I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% in the next ten years. Even in a less harsh scenario, I expect a decline of at least 20%.
As Reuters notes, such a shelving of branches and staff will see Barclays alone shut between 280-700 branches in Britain, along with cutting between 26,000 and 66,000 jobs worldwide. Jenkins was fired as CEO in July earlier this year while already midway through a bank strategy to cut 19,000 employees.
Jenkins remarked that the digital revolution is making for easier living in society. The former banking CEO made a striking example of disruptive, fast-growing companies have resulted in the “demise of once-powerful brands such as Nokia or Kodak.”
So how does this ‘Uber-moment’ from the Fintech sector come about in the near future?
“Firstly and most importantly, it must be disruptive. That’s to say, it needs to dramatically improve the customer experience,” he says, citing that Fintech would need to see a “ten-fold” increase of the customer experience currently provided by the traditional banking system. “Secondly, technology must power the service and be at its core,” he added, without mentioning bitcoin or the block chain. ”Thirdly, there must be a ubiquity to it.”
Despite the predictions, he sees the current Fintech climate resembling the very first iteration of the industry or as he calls it, Fintech version 1.0. “There is really not that much tech in many fintech companies,” he said, citing that most payments still ride with the traditional banking system, among other examples.
However, the wind and tide is firmly for the Fintech sector, according to Jenkins.
With the tsunami of capital [that’s] working in the sector, we cannot be far away from truly disruptive breakthroughs.
Barclays has made strides in investing and researching on new technology in the recent times, seemingly paying heed to its former CEO by joining the most talked-about commercial blockchain initiative that is the R3-led consortium. The group now counts 30 major banking and financial institutions to invest and explore blockchain technology solutions and applications for financial markets and industry.
Jenkins’ take on Financial technology arguably contrasts to the opinions of current JP Morgan CEO Jamie Dimon. Although Jenkins never explicitly speaks about bitcoin nor the block chain, he is clear in stating that the current banking industry is looking at a oncoming tidal wave of disruptive proportions. As a known Bitcoin skeptic, Dimon recently dismissed Bitcoin as a “waste of time,” while being more encouraging of blockchain.
The complete speech can be viewed in a video here.
Featured image from Wikimedia.