2017 was the year that the retail giants Amazon and Walmart battled it out – and while both of these huge brands ended the year with positive growth, other, lesser outlets did not fare as well. All eyes were on Amazon when they purchased Whole Foods in the summer of 2017, while Walmart rolled out convenience shopping and a downward spiral of prices that small retailers just couldn’t keep up with. These giants continue to grapple as other retailers alternate between fighting over the remnants and desperately clinging to their own market share.
A Battle is Brewing in the Banking Industry
The retail battle between Walmart and Amazon dominated the early part of 2017, but as we roll into the new year, a fresh war is brewing. Traditional banking, an institution largely unchanged for a century, is beginning to feel the crunch from the Fintech industry, and these establishment giants are beginning to push back.
Banking is a giant – a slow moving, sluggish giant that until very recently, has had little competition. Dominating everything from consumer checking accounts to lending and small business loans these titans have had few competitors and have simply absorbed many of the smaller concerns that have arisen in the past.
The Rise of Fintech
Financial technology is changing the way individuals bank and invest. In many ways, Fintech has freed investors and consumers from the chains imposed by the overgrown banking industry. Given the choice or being one more cog in the wheel of banking or opting for a more accessible, fluid and agile way to handle money and monetary transactions, many consumers are opting to take their business to financial platforms instead of their local bank.
Agility Allows for Customization
Fintech based consumer lending has taken a toll on the traditional banking industry, siphoning off profits and drawing the ire of the banks and CEOs who have been left behind. While banks have access to capital and a reliable flow of funds, fintech platforms are simply more agile and adaptable; the ability to spread risk makes consumer lending very appealing to investors, who continue to flock to fund fintech platforms.
Convenience and Access
In many ways, banks are simply not fully taking advantage of the technology they already have or passing these conveniences on to consumers. Deposits, loans and accounts are often still tied to local, physical structures, outdated rules and only accessible part of the time. In contrast, Fintech platforms are always open, always accessible and have the flexibility to handle a wide range of needs and products.
Small Business Leads the Way
While consumers continue to show interest in online platforms, small businesses are leading the way, demanding accessible, fairly priced online services that work with a mobile lifestyle. A recent survey revealed that more than half of the SMEs asked felt they needed more robust digital banking tools and access.
While big banks and traditional banking still have a competitive advantage the agility and flexibility of fintech is forcing them to give way in key areas like consumer lending. Bill Gates referred to conventional banks as “dinosaurs” over two decades ago; that label is finally beginning to catch up to them, as the next generation of banking – fintech platforms – begins to edge them out.