Aaron Greenspan: The End of the Banking Era. Recently, Blockbuster Video declared bankruptcy. The news wasn't particularly surprising to anyone who had been following the market for video rentals over the past ten years. Netflix emerged in 1998 with a better, more efficient model for video rentals, and as the speed of broadband internet connections increased throughout America, going to the store, the public library, or even the mailbox to get a movie made progressively little sense. Banks are next. Given current market trends, retail banking as we know it today will no longer exist by 2020. Even by 2015, almost all small retail banks will be struggling, and even some of the large banks will be trying to re-invent themselves as software companies as they are confronted by competition from more agile and technologically adept competitors: the people who make your cell phone.
A number of factors will influence the coming sudden shift away from brick-and-mortar banks. Banks Have More Bite When They’re Allowed to Bark: Matthew Lynn. Is Google the best candidate to create a good, customer-focused. Slowly -- and sometimes not so slowly -- the bricks have been giving way to the clicks for the past 15 years. Plenty of formerly unassailable business models have suffered as a result. The tears flowing for these companies, however, have been few outside their own high, stony walls. Users, customers, innovators, seekers -- the majority bottom sections of the social and economic pyramids -- these are the big winners in the many wonderful effects of the Web and Internet.
And I for one have the freedom, productivity, choice and empowerment to prove it. Except in one glaring area: banking. We are by no means done on the disruption front. I have had it with the old financial processes, lack of capability, murky institutions, rips-offs, peonage fees/rates -- and especially attitudes. I have had it with credit cards, banks, mutual fund companies, PayPal, debit cards, MasterCard and Visa.
Merchants hate it, users hate it. You want financial industry reform? A few good transactions. Says 50 Per Cent of Banks Will Still Lack an Innovation Programm. Egham, UK, January 5, 2010 View All Press Releases Gartner Makes Key IT Predictions for Banking & Investment Services Half of banks will still lack a formal innovation programme and budget by 2013, according to Gartner, Inc. The prediction is one in a series Gartner analysts have made on IT in the banking & investment services in areas including peer-to-peer (P2P) lending, disruptive technologies and security.
“Pressure from governments, regulators and consumers is making some banks risk-averse and creating a culture of introversion and inflexibility,” said Richard De Lotto, principal research analyst at Gartner. “The predominant view of IT is that it is only useful for cutting costs so tactical thinking about automation and rationalisation overwhelms longer-term decision and strategic plans and goals.” Gartner’s predictions for the banking and investment services in 2010 and beyond include: Contacts About Gartner Gartner, Inc. The Long Nose of Innovation.
The bulk of innovation is low-amplitude and takes place over a long period. Companies should focus on refining existing technologies as much as on creation In October of 2004, Chris Anderson wrote an article in Wired magazine called The Long Tail, a theory he expanded upon in his 2006 book, The Long Tail: Why the Future of Business is Selling Less of More. In it he captures some interesting attributes of online services, using a concept from statistics which describes how it is now possible for the "long tail" of a low-amplitude population to make up the majority of a company's business. One of his examples came from music: A large quantity of often obscure but nonetheless listened-to music can outperform a much smaller quantity of huge hits. The implications of the phenomenon have been significant for those interested in understanding the meaningful attributes of online vs. brick-and-mortar businesses and the book has apparently had an enormous impact among executives and entrepreneurs.