Banks are on the verge of their “Uber moment” as technological advancements are on course to force financial institutions around the world to close their branches and possibly fire half of their workforces, said Anthony Jenkins, the former chief executive of Barclays Bank.
‘Predicting significant disruptions’
“The number of branches and people employed in the financial services sector may decline by as much as 50 percent over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20 percent,” he said in a speech at Chatham House, the London-based independent policy institute.
Jenkins said in ten years’ time, there will be huge pressure on banks, which will struggle to implement new technologies at the same pace as their new rivals. This pressure, he asserts, will lead to major financial institutions being forced to automate a large portion of their operations, manifested most explicitly in the halving of workforces and bricks-and-mortar branches.
His statements add weight to recent reports that highlight the accelerating rate at which banks close their high street branches.
If Jenkins’ predictions prove to be correct, it would mean Barclays, the bank which fired him in July, could cut between 26,000 and 66,000 jobs worldwide, and shut between 280 and 700 high street branches.
High standards a lifeline?
Jenkins went on to say that barriers to entry are quite high in financial services, which allows the incumbents to probably last longer than in many other industries.
However, “The risk is that incumbents will be pushed into this utility, capital-heavy role that we’ve seen in other industries like telecoms. Ultimately, that will become intolerable to shareholders, so we could see consolidation and mergers,” he added, saying that this was likely to at the end of the 10-year period.
He also pointed out the attraction of Silicon Valley. It’s “vibrant” atmosphere can make it very difficult for banks to attract, or even retain, top technology staff.
“If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008,” Jenkins said.
It’s about the customers
Jenkins also covered the well-treaded topic of customer focus being the main priority.
“This was not about replacing colleagues with robots,” he said, but rather ensuring the employees know to focus their attention on the customer.
He also pointed out that in order to succeed in banking’s “Uber moment”, the services the incumbent financial institutions offer must be at least “ten times better” than the ones currently available.
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