For 300 years the banks have survived that customers came in off the street to insert or borrow money. When banks meet for the annual meeting on Monday morning, it will be with the knowledge that their former so autocratic status is challenged by a host of new players on massive digital development requirements and historically treacherous customers.
In the 1990s, the rug pulled out from under the music industry. Industry living selling CDs and partly minidisc and LP, but with the invention of the mp3 format music could suddenly distributed digitally. Certainly not legal, but superlight via the Internet.
It was convenient and changed the perception of consuming music. Suddenly it no longer makes sense to buy a CD with ten tracks to grab a single hit. For ten years the storm raged around the recording industry, and turnover fell by two thirds.
Now the storm has hit the banks – a sector under massive change.
The Austrian economist Joseph Schumpeter described already in 1942 how the innovation and development of new technologies at the expense of existing programs, which may engage in massive and all-embracing change in order to survive.
That was what happened to the music industry in the 1990s, and it is the same threat that banks now face.
We have heard about it drip. The digitization eating into the banks’ physical presence, and the advent of alternative payment forcing banks to fight for control of the money transfers that traditionally were their livelihood.
In the US coffee chain Starbucks, held on 20 largest bank calculated based on the amount that customers have added to their loyalty cards.
And that’s just one example of how banks’ role as a provider of payment infrastructure is being challenged.
“Starbucks and other companies with prepay cards have a huge amount below, which is basically a deposit. An even bigger question right now, which compete for business is fierce, however, are loans from alternative channels for companies and individuals – for example through crowd funding. This is something that we see, but it is yet to predict how large it is, “says Jesper Rangvid, Professor of Finance at CBS.
Banks have lost the monopoly
According to Søren Jensen, director of the Division Future Business at the IT Company Atea, banks have lost their monopoly on money management.
“Today, banks can no longer control over the format. Competition can come from anywhere – from eBay, Google, Apple. It is suddenly on consumer conditions, not the banks, “he said, pointing out that the banks with the sale of Nets have loosened the grip further.
“The banks have been sitting on the sovereign to operate payments because it has been a legal requirement that it has been those who issued credit cards, and they have not closed the other into their ecosystem. Because they choose to sell the Nets, they release themselves from liability, but it is also the obligation that protected them, ”
“Our daily business has changed, and which are now just something generic, something underlying that run underneath. But nothing can replace the advice and it is the banks’ core competence. On the other hand, the demands on them stronger. Customers meetings only bank in counseling situation, and that is where the bank can create loyalty of the customer ‘
The development is driven by several trends that are interconnected.
“Banks compete always, but they are more pressed today than when times were good. They think cost-conscious, generating branch closures and digitization, which is also a business opportunity and one of the future competitive parameters for them,”