Traditional banks may not exist by 2025: PwC

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BANKING
Traditional banks may not exist by 2025: PwC
The Nation

BANGKOK: -- New services by non-bank operators like Google, Alibaba, and mobile operators are threatening the existence of traditional banks, and without catchup in terms of technology these banks may not exist by 2025, said PwC.

In its new report titled "The Future Shape of Banking", the consulting firm noted that technology, customers, and regulation are key determinants of the industry's future and banks as well as regulators worldwide need to adapt to a changing financial market.

While banks in Thailand and across the globe remain profitable, the industry needs to consider how long this strong performance can go on given changes to technology, customers, and regulations, according to Boonlert Kamolchanokkul, a partner and risk, quality, and banking leader at PwC Thailand.

"With new non-bank entrants and the rise of electronic banking and online platforms combined with technological advances, existing banks' infrastructures and systems could be jeopardised by as soon as 2025 to 2030," he said.

In developed markets, the rapid up-take of mobile banking in the UK and the US, together with the rollout of wireless and broadband infrastructures, is also posing challenges to the branch-based model of traditional banks, the report showed.

"Banking services will increasingly move away from physical, tangible storefronts into technology-based channels. The biggest question for banks will be how to maintain proper focus and investment while keeping an eye on customer transactions to other players in the value chain," Boonlert said.

PwC says the game changer is the speed of technological change, which can alter the cost structure of entire industries to the point where what was once a barrier to new entrants becomes a handicap for incumbents.

"Physical distribution channels such as bank branches and ATMs are now beingreplaced by smartphones. Technology is also making it cheaper for customers to move between banks and other service providers."

Low switching costs and reduced barriers to entry hasbrought in new entrants: peer-to-peer lenders and payment solution providers, Boonlert explained.

Yet the report notes that brands and trust will determine how and with whom customers choose to bank.

"Brands and reputation will become central to bank value, especially banks that build brands representing trust and security to customers," he added.

Boonlert concluded that regulators and regulations need to adapt to deal with the changing banking landscape.

"There is a need for greater certainty forthe regulatory agenda, and for policiesto focus on the role of banking as a positive contributor to economic growth. Regulators should care more about this."

Source: http://www.nationmultimedia.com/business/Traditional-banks-may-not-exist-by-2025-PwC-30243819.html


-- The Nation 2014-09-22

[Time Traveller]

That may be true for developed markets, in places like thailand regulations and updating laws change at glacial speeds. So it's banking system will still remain stuck in the 20th century for most of the 21st century. And likely into the 22nd century also.

[northernboy]

That may be true for developed markets, in places like thailand regulations and updating laws change at glacial speeds. So it's banking system will still remain stuck in the 20th century for most of the 21st century. And likely into the 22nd century also.

That sadly is the thinking that will make any Thai banks that does not change with the times obsolete. It is already an international trend to use virtual banks, how many of TV reader have used Paypal or other virtual banking system already? Paypal has make its founder and purchasers a lot of money and even more to come for sure. It is not a matter of regulations but of convince and speed that make them work not following regulations. Financial institutions finds ways around rules, always have and always will. Often due to the government slowness to change rules is what makes it possible for them to bend the rules at the public's downfall and their excessive profit.

[i claudius]

neither will i by then ,so dont care.

[soalbundy]

What about the old who aren't so tech savvy and the poor or those, like me, who just don't want an i phone, i don't even use my cheap mobile.

[ggt]

Traditional banks may disappear because people will realize that their money is not safe there, can be confiscated by the bank or government...and that there is no clear advantage to leaving your money in a place where you have to pay to have someone use your money...the banking industry is in trouble worldwide...it is likely just a matter of time before many large banks around the world fold...taking much of the money entrusted to them...with them...

[Jonmarleesco]

Khun Boonlert seems to be overlooking the 'too big to fail' culture, which will take some eliminating.

[Pib]

Maybe by 2125 but not by 2025...and for Thailand not before 2225.

[Loles]

Tradicional banks may not exist, but the pWC sure won't exist by 2025 ...

[AnotherOneAmerican]

That may be true for developed markets, in places like thailand regulations and updating laws change at glacial speeds. So it's banking system will still remain stuck in the 20th century for most of the 21st century. And likely into the 22nd century also.

That sadly is the thinking that will make any Thai banks that does not change with the times obsolete. It is already an international trend to use virtual banks, how many of TV reader have used Paypal or other virtual banking system already? Paypal has make its founder and purchasers a lot of money and even more to come for sure. It is not a matter of regulations but of convince and speed that make them work not following regulations. Financial institutions finds ways around rules, always have and always will. Often due to the government slowness to change rules is what makes it possible for them to bend the rules at the public's downfall and their excessive profit.

Ever tridpaying the street som tam seller with paypal?

Not to mention paypal hardly works in 3rd world countries.

ATMs with no/fewer branch is the way to go.

[WhizBang]

I am guessing he is talking about THAI banks, as they are woefully behind in just about everything they do.

Overseas banks are far more on the ball and pretty much up to date on the changing technology.

[soalbundy]

I am guessing he is talking about THAI banks, as they are woefully behind in just about everything they do.

Overseas banks are far more on the ball and pretty much up to date on the changing technology.

Yes,they steal your money far more efficiently.

[Sophon]

Maybe by 2125 but not by 2025...and for Thailand not before 2225.

Agreed, there may come a time where banks as we know them today don't exist or have morphed into something completely different. But to suggest it could happen as early as 2025 is ridiculous and just shows that the PwC either have no idea what they are talking about or are looking for cheap publicity (my bet is on a little bit of each).

Sophon

Edited September 23, 2014 by Sophon

[MrWorldwide]

If Paypal is the future of banking, I'll cash in my chips right now. They sit on your money while the seller waits patiently with your goodies in his warehouse - it's glacial.

[belg]

yeah yeah

put all your money in a google account than with 0% intrest

looooooooooooooooooooooooool

Edited September 24, 2014 by belg

[Aussieroaming]

The world may not exist by 2025... What should we do, stop trying? I think not......

[soalbundy]

The world may not exist by 2025... What should we do, stop trying? I think not......

stop trying to do what ? Who cares what banking system is in place,that's like a sheep worrying about who is going to sheer it.