Thomas Achhorner: «Banks Are Surviving on Lazy Money»

Thomas Achhorner: «Banks Are Surviving on Lazy Money»

Trend 2: Regulators Promoting Competition

In the EU, the second Payment Services Directive (PSD2) is requiring banks to provide other qualified payment-service providers (PSPs) connectivity to access customer account data and to initiate payments, representing a huge step toward commoditisation in the region's banking sector, according to a report by McKinsey. 

«The PSD2 is brutal – the boy scouts can now open a bank, and can use the infrastructure,» said Achhorner. Also, banks traditionally charge a fall-below fee, a fee that is slapped on the customer if the balance in the customer's account falls below a certain amount. Virtual banks however will not be allowed to impose these fee based on the initial regulations. 

According to draft guidelines by the Hong Kong Monetary Authority, virtual banks looking to set up in Hong Kong will need to have at least 300 million Hong Kong dollars ($38.4 million) in capital, and cannot impose a minimum account balance or low balance fees.  

Virtual Banking and E-money Licenses

This year, more than 70 parties have expressed interest in virtual banking licenses that are being made available by the Hong Kong Monetary Authority (HKMA).

In Malaysia, ride-hailing giant Grab has been granted an e-money license from the country's central bank in December 2017. In Indonesia, Grab rival Go-Jek bought a payments startup to get around e-money licenses.

Trend 3: Millennials Trust Their Banks Less Than Their Parents

Millennials may not have been directly affected by the global financial crisis, but their parents probably were. The historical event has planted the seeds of distrust of the banks, despite efforts by banks to clean up their image.

«Young people these days turn to two sources for financial advice,» said Achhorner. «One of them is their peers, while the other is the machine.»

Typical Reactions

Faced with challenges on multiple fronts, Achhorner said he usually received two types of reactions from the banks – denial or «Flucht nach vorne». This means leaping forward, with banks leaving their legacy systems behind while starting an entirely new division that can move as fast as the fintechs.

«Ten years ago, many people believed that e-commerce will not take off. Today, big bookshops have closed down. The same will happen to some banks,» said Achhorner.