Tech firms to overtake traditional banks, says expert

KUALA LUMPUR: Banking industry expert, Brett King, has predicted that technology companies will overtake traditional banks to become the world’’s largest financial institutions by 2025.
“By 2025, the biggest bank in the world will not be any of the banks today, but technology companies providing financial services that are integrated in peoples life,” said King, who is also the founder/ CEO of New York-based mobile-banking service Moven.
Last year, King said, China’s electronic payment gateway – Alipay – processed US$17 billion (RM72.9 billion) payment through mobile phones in one day on its Singles’ Day shopping spree that falls on Nov 11 yearly.
“What’s interesting is, Alipay is an online payment platform and not a traditional bank,” he told Bernama recently.
On survival tips for physical banks in the future, King suggested they could partner with technology companies to leverage the latter’s financial technology (fintech).
“There is no need to build their own technology but partnering them and encouraging to invest in fintech is the cheapest approach. Acquiring from them is going to cost more,” he said.
A financial institution, said King, should be able to execute real-time delivery banking experiences in the future as people would expect immediate delivery services by then.
Asked if traditional banks would gradually disappear in the future, King dismissed the idea but predicted the number of branches would be halved by the end of the next decade.
“We are not only seeing the branches being reduced, but its size (sq ft) is also shrinking,” he said.
“It does not mean that banks are closing down, we just do not need many branches for banking service anymore,” King said.
On the cyber risks exposure faced by fintech, he said, companies should always invest in the maturation of technology as quickly as possible, as a mature technology always helped to reduce risk.
“Would cyber attack stop people from using technology for financial transactions? No, it will not.
“The more the attack occurs, the stronger the immune system of a technology will get,” he said.