Wednesday, 13 November 2019

Banks Facing a "Kodak Moment" In Face of Fintech Disruption

Banks waste too much effort on legacy technologies and may be displaced by more agile fintech firms, believes former Barclays CEO Antony Jenkins.
Banks may go the way of Kodak and Blockbuster, and mid-market banks are the most threatened by more agile fintech firms, believes Antony Jenkins, former CEO of Barclays.
"But the problem with large financial institutions is they are like museums of technology," Jenkins said for Reuters, pointing out the cumbersome legacy systems that are still running.

"There is frankly no other industry like it in the world."
Jenkins moved into fintech a year ago, by launching the 10X Futures Technologies fintech firm with the aim of building a virtual back office anew, without relying on the complicated legacy approach of traditional banks.

10X Future Technologies wanted to build a back office platform for Virgin Money.

Jenkins is also a believer that blockchain technologies would be responsible for a move away from traditional banking. He listed the biggest future threats as artificial intelligence, the internet and distributed ledger technology. Jenkins is also a believer in the potential of Bitcoin:

Antony Jenkins pointing out with his tweet : Bitcoin's main characteristics which defines its worth & future prospects! and linked Bloomergs article "Bitcoin is leaving other digital coins in the dust "

Uncertainty surrounding another possible split in bitcoin is weighing on the value of the hundreds of other digital tokens that have been issued this year as the price of the biggest cryptocurrency...
Due to better technologies, banks may have to shed employees much faster, and Jenkins sees big changes happening in less than a decade.

At the moment, fintech firms may be facing regulatory hurdles when securing licenses that are better-tailored to traditional banks. While new payments systems are being built, most fintech apps and payment channels still rely on the banking system for "the last mile" of the journey. And banks still have the power to deny access to their systems, or put hurdles before the new technologies.

But Jenkins believes the fast technological pace may pressure banks and move them away from their monopoly positions:

"What makes it different today is the pace at which these technologies are moving independently, and the combination of these technologies stacking on top of each other."
In earlier interviews, Jenkins has noted that regulators are "cautious but favorable" to fintech proposals.

Among distributed ledger firms, some of the most serious contenders for official status are Ripple and OmiseGo. Ripple is already working with banks to provide a network of servers that would allow faster and more secure transfer of assets worldwide. OmiseGo is the Ethereum-based blockchain project of Omise. Omise focuses more on small payments and consumer finance.


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