Banks As Commodity Utilities In A New Payment World


Editor’s Note: Christoffer O. Hernæs is executive VP of strategy, innovation and analysis at Sparebank 1 Group, Norway’s second-largest financial institution.

With the recent launch of Apple Pay and leaked screenshots of Facebook integrating payments with Facebook Messenger fintech companies, there is a lot of speculation regarding the future of banking. Backed up by the way-too-often quoted Millennial Disruption IndexAccenture’s Banking 2020 and a range of similar reports tech evangelists predict that Apple, Facebook and Google will become the banks of the future.

This is highly unlikely, not because of lack of abilities, but rather because the challengers don’t want to be banks. The cost and complexity of running a bank is not compatible with the fundamental business model of tech companies, and meeting the capital requirements, compliance and overhead associated with running a bank is perhaps best left to the banks. This creates another scenario that should be even more frightening for incumbents where traditional banks are reduced to infrastructure providers.


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