He said financial services will experience a 50% decline in branches and staff in the next 10 years. He said we are “at the end of the beginning” of a revolution in financial services where fintech is too narrow a characterization of what is happening.
A ‘Kodak Moment’ Arrives
It is possible that a “Kodak moment” is occurring in which banks become irrelevant to customers, Jenkins said. He said banks must act quickly to avoid this. He said they have to think about doing things that are radically different.
Jenkins in 2015 warned that banks faced an “Uber moment” on account of new technologies.
Cryptocurrencies like bitcoin and artificial intelligence are just the beginning of a new transformation in banking, he said. The banking system, using blockchain, will be transformed in a way that they will no longer really exist.
Fintech Must Be Disruptive
In a 2015 speech at Chatham House, the Royal Institute of International Affairs in London, an independent policy institute, Jenkins said the fintech sector must be disruptive, meaning it needs to dramatically improve the customer experience. He said fintech would need to see a “ten-fold” increase of the customer experience currently provided by the traditional banking system.
Secondly, technology must power the service and be at its core, he said. And thirdly, there must be a ubiquity to it.
The current fintech climate resembled the first iteration of the industry or, as he calls it, fintech version 1.0. “There is really not that much tech in many fintech companies,” he said, citing that most payments still ride with the traditional banking system, among other examples.
Former UBS Officer Weighs In
Oliver Bussmann, former chief information officer of UBS, said echoed Jenkins’ recent remarks in saying blockchain is transforming finance by eliminating the need for middle men. He said a new business model is evolving that is decentralized. This change, he said, has been introduced as an equity. One sign is that startups are using cryptocurrency to secure funding and use it as a currency to provide and get paid for services.
Bussmann said there is a different incentive being established today that did not previously exist.
Jenkins and Bussmann both recommended open banking platforms that allow third parties to manage finances, blockchain technologies like cryptocurrencies and artificial intelligence, and recruiting for experts in these areas.
New European Union regulations will require bank customers to be able to use third party, non-banking firms to enact payments and gain access to customer data. The Revised Payment Services Directive (PSD2) takes effect in 2018. Some have argued this could result in millions of revenues lost should companies like Amazon become payment service providers.