Apple and Amazon know what you spend your money on and when you spend it. Facebook, knows more about you than your friends do, and it knows what all you like. Google knows what you are looking for and when. Google, Paypal and Apple can make payments for you
Who is the Biggest Threat to a Bank?
Google…as many large banks would acknowledge, i.e. if Google was to get into banking! The banks feel that they can manage their peers, as the other banks too are in the same boat. With all the data that Google has, it can be a big trouble for the banks! Luckily, it has no plans (as of now) to venture into banking , but if it does at some time, the Banks would be under serious threat .
With the fast changing technology scenario, things are not the same for traditional banking , mainly credit card companies, banks and niche loan/money transfer companies.
An increasing number of alternatives are available to traditional means of finance with Social Networking, Cloud and Mobility. An emergence of non-traditional players is a threat to the traditional banks and some of these technologies/companies are showing good growth. The mobile payments growth is above 90% worldwide and continues to grow.
The traditional advantage of ‘knowing the customer’ in retail banking is being lost to these new generation companies. Banks knew ‘how and where the customers’ were spending but with new technologies and online transactions, this advantage is eroding.
The new technology companies are taking business away from banks on multiple fronts
- The telecom service providers, can now become banks
- Payment platforms and mobile payments have caught up
- Crowd funding platforms are providing money at much more reasonable rates
- ‘Trade Finance’ is under threat with cloud and e-invoicing companies like Tradeshift.
- Peer to Peer ‘Money Transfer’ has gained traction and many new generation companies and offerings have sprung up like Skrll and Paypal
- Non-cash payments is growing with e-vouchers or pre-paid cards
Technology can help companies go across physical boundaries without spending too much on physical assets. It is also helping these companies to scale more quickly and economically than traditional banks, since many of these companies have robust and profitable business models.
About the Author:
Jayant Rastogi is a senior leader in the IT and Communications industry, building new businesses and establishing and growing them. He has worked for some of the top MNC’s (Motorola Solutions Area Director-South Asia and Novell Area Director- Asean and India) and Indian Enterprises .He has been a part of Enterprise Mobility from the time of its advent and has built one of the largest Enterprise Mobility businesses in the region.
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