Shhhh – don’t look now but you know those big monopolies, I mean tech firms, that seemingly control the majority of the US GDP, ad budgets and retail dollars? You know – Amazon, Google, Paypal and the likes. Oh, THOSE tech firms. Turns out they are the REAL threat to the legacy banking system, not the fintechs we write about all day long here at FintekNews, or so says McKinsey & Company. We can’t disagree, though we would find it massively concerning if they jumped in and started taking over our financial sector as well. Very concerning, and another reason to love decentralized digital currencies.
“Upstart financial technology companies may be nipping at the heels of the world’s big banks, but new research from global consultant McKinsey & Company suggests established “platform” players such as Google and Amazon are emerging as the real threat to the incumbent financial firms’ healthy margins.
“Seventy-three percent of U.S. millennials say they would be more excited about a new offering in financial services from Google, Amazon, Paypal or Square than from their bank — and one in three believe they will not need a bank at all,” declares McKinsey’s latest annual global banking review, released Wednesday.
Asheet Mehta, co-leader of the global banking practice at McKinsey and one of the lead authors of the report, says the edge the platform companies have is that they are creating entire digital ecosystems with a range of “intuitive and pleasing” goods and services that are available through a single access gateway.
“In quite a few markets, platform companies have already begun attacking banking revenues,” Mehta said. “And there is no reason to think this trend will not spread to other markets.”
Lest anyone think Canada is exempt, the McKinsey report quotes Dave McKay, the chief executive of the country’s largest bank, Royal Bank of Canada, acknowledging the situation facing the banks. McKay, who has long accepted the challenge from the platform players, says the banks’ best defense — at least in the short term — is the trust clients have in them to provide secure services and protect sensitive financial data…”
Full Story at FinancialPost