Antony Jenkins, the group CEO of Barclays from 2012 until his firing in 2015, told the Money 20/20 Europe fintech conference in Copenhagen that there is a possibility of banks becoming irrelevant if they don’t keep pace with fintech developments, reports CNBC.
Jenkins highlighted the possibility of banks facing a ‘Kodak Moment,’ referring to how film was slowly rendered obsolete by the digital age of photography. This time however, he believes the banks can stay relevant as long as they act quickly.
New EU regulations, set to take effect in 2018, allow for third parties to manage the finances of bank customers, which opens up numerous channels for fintech innovation, per CNBC. Jenkins warns that unless banks embrace technologies such as blockchain, they may fall too far behind.
Besides the survival of their industry, the banks have other reasons to incorporate fintech at a faster rate. Jenkins stated at the conference that digital ledgers could result in savings of over $80 billion in efficiency improvements, per CNBC.
At this point, banks are racing against each other and the fast-developing financial technologies worldwide.
"We're really at the end of the beginning of what we see as a revolution driven by technology with financial services and fintech is really a too narrow categorization of what's going on here," Jenkins said to CNBC at the conference on Monday. "As the technologies develop and season, they're going to create a totally different way of doing banking and financial services."
Two years ago, Jenkins warned of the decline in staff and branches in the banking industry due to tech innovations "by as much as 50 percent over the next 10 years" in what he called an “Uber moment.” At this conference, he returned to that theme.
"Now we will see the possibility – not necessarily the probability – of what we call a 'Kodak moment', where increasingly banks become irrelevant to their customers," he continued. "Banks can avoid that, but they have to act now, and what they really need to do is think about innovation, but also transformation, doing something radically different."
Former chief information officer of UBS Oliver Bussmann echoed Jenkins’ sentiments, mentioning how the evolution of cryptocurrencies and blockchain technologies will render middlemen obsolete. This will save billions but also account for copious job losses in the financial sector.
"It's a new business model emerging which is decentralized, where the middle man is disappearing and this has been now introduced as an equity, so a lot of startups are now using the cryptocurrency to get funding and using this as a currency to get paid and also provide services," Mr. Bussmann told CNBC. "So there's a different incentive now being set up that didn't exist before, and this is the reason we are seeing a rapid increase of this kind of business right now."
For now, both Jenkins and Bussmann are merely warning the industry of what is to come. But if banks can’t keep up with the torrid pace of technological innovation within finance, they may be left behind.
Photo: Chatham House