The former CEO of Barclays had grave words on the future of traditional banks this week, as he drew parallels with black taxis losing their fight against Uber.
Banks are approaching an “Uber moment” with a looming threat that technology will replace high street branches, outshine their customer service and even bring down entire banks, replaced with digital services.
That was the grave warning from the former CEO of Barclays, Antony Jenkins, who was sacked in July over disagreements about the bank’s strategy.
On Tuesday night, in a speech titled “Approaching the Uber moment in financial services”, Jenkins described technology as “an unstoppable force” which would bring about huge change for traditional banks.
In the same way that Uber is replacing traditional black cabs and private minicab firms with a simple mobile app, next year entirely app-based banks like Mondo and Atom Bank are coming to overturn traditional banks with their focus on technology and simplicity.
Jenkins expects this shift could decimate the workforces at incumbents like Barclays, HSBC and Lloyds.
“The number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20%,” said Jenkins, in a speech at Chatham House, reported by Reuters.
And it’s not just current accounts and branches which are being threatened by technology, their other services like international money transfer (TransferWise), mortgage lending (LendInvest) and personal loans (Lending Works) are all under attack from challengers.
“The barriers to entry are quite high in financial services, so that will allow the incumbents to probably last longer than in many other industries,” said Jenkins.
But despite these barriers, with the flood of cash being poured into new financial technology (FinTech) firms, he said it won’t be long before we see “real disruption” to banks.
Jenkins said the flow of talent from banks to new FinTech upstarts, as The Memo reported yesterday, is also damaging any hopes of defending against this looming threat.
“If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008.”
The next decade, Jenkins said, will be crucial in the fight between incumbents and these digital upstarts looking to become the future of finance.
And, with London’s title as the FinTech capital of Europe if not the world, we’ll be watching this battle from the front lines.