Banks Can Fend Off Tech Onslaught
Amid the daily onslaught of fintech disruption news, a major ratings agency is sticking its neck out to argue that banks need not worry about losing their lock on clients just yet.
In Asia banks are bending over backwards to accommodate and utilise financial technology. Partly to upgrade their own products and services and partly with one eye on the numerous fintech interlopers laying siege to their business. The payments segment for example is one area where the largest technology firms are hoping to disrupt banks.
Your Margin Is My Opportunity
However, long established pillars such as stringent financial regulation will limit the tech giants' ability to seriously compete with banks and other financial services firms over customer deposits, according to a report from S&P Global's Paul Reille.
S&P Global does side with Amazon CEO Jeff Bezos, who said that «your margin is my opportunity» and considers Apple, Amazon and Ant Financial, the Alibaba affiliate, as genuine long-term contenders for traditional banking franchises.
Banks of the Future
Ant Financial and Tencent play significant roles in the $5.5 trillion Chinese mobile payment sector. The pair have also penetrated into most Southeast Asian markets and beyond.
Tencent's Webank platform, which allows retail customers to purchase products from multiple competing credit and asset management providers, is a potential template for the distribution of financial services in the future.
Spelling Trouble for Banks
New technologies allow faster scale on thinner margins spelling trouble for banks that are unable to make the digital switch fast enough, said Venky Srinivasan, a vice president at Oracle Financial Services, in a recent interview with finews.asia.
Financial services offered by banks in Asia may remain out of scope for the voracious technology players for the moment, however, other lucrative activities with lower barriers to entry such as transaction services could face long-term disruption.
