Commonwealth Bank chief executive, Ian Narev, is the first banker to spill his mental load on the prospect of tech firms deeply disrupting the financial services sector.
Speaking at the G100 Congress in Sydney this morning, Narev observed that accelerating network speeds and the rapid evolution of smartphone apps is already changing the industry — but he anticipates even bigger threats in future.
“We consider we have got very, very good competitors in the major banks, we have got very good competitors in the next tier banks,” he said. However, he isn’t just worried about other banks, but also technology firms who are already cash-rich and international.
“The Apples, the Googles, the Samsungs, the Paypals, the credit card companies, who can pick particular slivers as a result of the application of technology into financial services and compete,” he said. “We need to be prepared for that.”
His warning may sound a little preposterous: after all, can Apple really become a bank? Possibly.
Apple already has over 400 million active iTunes accounts worldwide, each one linked to a credit card. It likes to remind us of this relatively frequently.
While firms such as Apple, Google, Samsung, and Paypal have created innovative payments and quasi-banking features, it is still a stretch to say that their capabilities are bona fide threats to banking – at least not yet.
Banks and other financial institutions still have several important advantages, including enjoying long-established, trusted relationships with customers. In addition, most financial institutions have implemented rigorous privacy and information sharing protocols, something that may be lacking with alternative organizations.
Financial instuitions can learn from these organizations and take advantage of new processes and technology to better serve their customers. It will be their business to lose if they don’t acknowledge new potential threats from other organizations to improve their own products and solutions.
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