A look back at history reveals numerous instances in which technology disrupts an industry. A century ago, the automobile displaced horses. A more modern example that also involves the automobile is Uber. Compared to traditional taxi cabs, Uber’s ride-hailing app offers consumers a way to get around a city that’s lower cost and more convenient to pay.
Cost and convenience are also driving changes in finance that some technology observers describe as banks' Uber moment. Technology is disrupting how people manage their money. Transactions that once required face to face interaction were replaced by online banking, where people managed their money via their computers. Now online banking is going mobile as smartphones and banking apps allow consumers to bank from wherever they happen to be.
This “Uberization” of finance is turning the banking sector on its head. A Financial Times analysis found that nearly 100,000 banking jobs were cut in 2015, which is roughly equivalent to 10 percent of the combined staff of the top 11 European and U.S. banks. Former Barclays CEO Antony Jenkins last year warned that up to half of banking jobs could be replaced by apps and algorithms over the next decade, according to Business Insider. Financial technology enables consumers to make transactions smarter, cheaper, and often faster, he explained. Just as Uber is squeezing the taxi industry, financial technology will squeeze bank operations, leading to financial industry layoffs.
Banks will need to look ahead if they want to be part of the financial industry change, rather than becoming a victim of it. Financial institutions will need to embrace technology as both a standard way of conducting business and as a way to bring in new sources of revenue. Mobile wallets might be able to offer the solutions that banks need.
Netclearance Systems offers a solution called mBeaconPay, a mobile payment platform that enables banks to acquire new merchants and to offer payment processing services. The technology allows banks to perform these actions without any intervention from the credit card networks and to collect valuable consumer purchase data. Technology is changing the industry – for the better, we believe. Contact us to learn how the latest in financial technology can help you.
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