Nearly 80 per cent of heritage financial services firms globally will go out of business, become commoditised or exist only formally but not competing effectively by 2030, Gartner said on Monday.
These firms will struggle for relevance as global digital platforms, fintech companies and other non-traditional players gain greater market share, using technology to change the economics and business models of the industry, said the market research firm.
“Established financial services providers will have to move faster on digital business by building digital platforms or finding niche products and services to sell on others’ platforms,” said David Furlonger, Vice President and Distinguished Analyst at Gartner.
A man uses an iPhone 7 smartphone to demonstrate the mobile payment service Apple Pay at a cafe in Moscow, Russia, October 3, 2016. Picture taken October 3, 2016. REUTERS/Maxim Zmeyev – S1BEUEYZNGAB
Banks face a growing risk of failure if they continue to maintain 20th century business and operating models, he warned.
According to Gartner’s 2018 CEO survey, while financial services CEOs continue to prioritise revenue growth, there has been a clear shift toward emphasising efficiency and productivity improvements.
“The future of the financial services industry is increasingly weightless, requiring few physical assets to establish or maintain a presence. That makes the industry especially vulnerable to disruption by digital competitors,” noted Pete Redshaw, Practice Vice President at Gartner.
The speed of digital transformation in financial services partly depends on regulation.
“In some nations, conservative regulations will inhibit innovation, while other countries, such as Australia, Brazil, China, India and the UK, will use regulation to speed transformation,” said Gartner.
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