McKinsey
recently published a report about the impact of the digital revolution on the
financial services industry (http://www.ft.com/cms/s/0/a5cafe92-66bf-11e5-97d0-1456a776a4f5.html#axzz3o7uTWUbJ ). Some of the sectors that will see a
decline in revenues and profits include payments processing, SME lending,
wealth management and mortgages. At the same time it’s mentioned that “most
attackers do not want to become a bank but want to squeeze themselves between
the customer and the bank and skim the cream off”. Basically meaning they will
reap the profits without running risks or be subject to regulation.
In the same
week I attended a presentation by Steve Tunstall talking about the impact of
the digital developments on regulation (http://parima.org/steve-tunstall/ ). One example he used was Uber, which
basically drives out the taxi industry in many countries – including the heavy
regulation in that sector. Regulation is basically replaced by openness and
transparency. It’s no longer a regulatory body that safeguards fair pricing,
adequate customer service levels and safety, direct feedback from customers
shared via the cloud to everyone interested keeps the company in check. An
interesting thought: regulators have been in put in place by government and
societies to protect individuals from wrongdoing by institutions like banks. If
customers get direct influence over the behavior and service of institutions
likely less regulation might be needed.
What’s your
view? We welcome your thoughts.
