Banks are not prepared for the wave of disruption from digital companies seeking to capture the financial market, according to new research.
In a survey of senior executives from the UK’s retail banking and wealth management sectors, digital innovation agency Adaptive Lab found that legacy technology and rapidly changing consumer behaviour were hampering innovation.
Commenting on the findings, James Hayock, managing director at the firm, noted the disruptive potential of bitcoin’s distributed ledger:
“The incumbents will get displaced by new entrants offering a better customer experience and price … their revenues will diminished in a market of higher switching frequency as they’re relegated to undifferentiated utilities, before finally their core competency of storing and transferring value is challenged by the arrival of new technology – the blockchain will disintermediate the banks completely.”
Additionally, the research also revealed that banks currently place too much emphasis on compliance – both in terms of focus and resources – with it taking up between 50% and 90% of their IT budgets.
“It’s plain to see that a perfect storm of competition, technology, shifts in customer behaviour and regulation looks set to wreak havoc on the businesses we trust with our money. It’s a matter of when, not if, banking is reinvented,” concluded Hayock.