Banks of the future will be technology companies with a banking licence, and traditional finance options may give way to more digitally advanced methods and platforms, say fintech specialists.
According to panellists speaking at the Fintech CEOs on the Future of Finance seminar in Sydney on Wednesday night, financial technology firms will soon attract market share and talent away from current banking incumbents, while new digital roles set to replace traditional finance jobs.
Speaking at the event Jost Stollmann, CEO of Tyro Payments, predicted that 'next generation banking' would eventually take over, with at least one of the big four banks to disappear completely in the next few decades.
“Can an old-style bank respond and stay competitive? Maybe. Can all of them? Probably not. Just think: one of the big four banks could disappear in the next 20 years. The only question is, which one will it be?” he said.
“Unless the banks can unbundle their products, overcome their legacy infrastructure and compete with low-cost ‘provider agnostic’ digital platforms, they might well cease to exist.”
The seminar, hosted by OnMarket, took place at the University of New South Wales’ University Network for Investing and Trading (UNIT).
The Australian fintech sector is forecast to take $10 billion in aggregated revenues away from the big Australian banks and contribute $3 billion of new revenue to the Australian financial services sector from 2015 to 2020, according to recent Frost & Sullivan study, Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020.
Though fintech would attract consumers away from traditional banks with good service and lower costs, a key challenge for fintech startups is first to win the confident of customers, according to fellow panellist Brendan Malone, COO of Acorns Australia.
“Winning confidence [is] about providing a seamless and reliable service to our customers. People automatically have that confidence in the banks, but as a fintech, we’ve had to earn the trust of our customers,” he said.
Fintech is also reshaping the investment industry by offering greater access to investment opportunities for lower income earners, and opening up new career opportunities for today’s university students, according to Ben Bucknell, CEO of OnMarket BookBuilds.
“There’s never been an easier time to transform a good idea into a business plan. That creativity is very attractive to young people,” said Bucknell. “We’re aiming to draw them to fintech before they get trapped in a middle-office role preparing PowerPoint presentations just to feed an outsized mortgage.”
Georgia King-Siem, senior manager with KPMG, says the disruption caused by fintech will continue as financial services become automated and commoditised – but only fintech businesses that truly innovate will stand out and win market share.
“Understanding and embracing innovation and the disruption it brings is necessary for survival – we must evolve or face extinction. On the flip side, those that innovate effectively will have a greater opportunity to increase profitability, productivity and develop a sustainable competitive advantage,” she says.