Anthony Jenkins, the former CEO of Barclays, considers the current banking system will be significantly transformed by the financial technology in the next ten years. According to Jenkins, almost half of the bank’s branches would be closed due to the rapid growth of new disruptive fintech startups.
Jenkins was fired from Barclays in July after its board decided the bank needs a new CEO with the right set of skills. Under the bank’s strategy, 19,000 employees will be cut by 2016.
“I’m a passionate believer in the transformative power of technology. It is an unstoppable force, which often has a hugely positive impact in the way we live and work,” Jenkins said.
“I’m predicting that over the next 10 years, we will see a number of very significant disruptions in financial services — let’s call them Uber moments – driven by companies in the Fintech sector,” he added.
Jenkins was delivering his speech named Approaching the ‘Uber Moment’ in Financial Services’, at the Chatham House, the Royal Institute of International Affairs in London.
“We will see massive pressure on incumbent banks, which will struggle to implement new technologies at the same pace as their new rivals [from the Fintech industry]. That will make it increasable challenging for them to deliver the returns and profitability that their shareholders demand,” he said.
“Ultimately, those forces will compel large banks to significantly automate their business.”
He is convinced the number of people working in the financial industry will decrease by as much as 50% within the next ten years.
“I predict that the number of branches and people employed in the financial services sector may decline by as much as 50% in the next ten years. Even in a less harsh scenario, I expect a decline of at least 20%.”
As Reuters wrote, Barclays could close between 280 and 700 branches in the UK and cut between 26,000 and 66,000 workplaces globally.
During his speech, Jenkins said the current financial industry is close to a so-called “Uber moment” from the fintech sector. He referred to the popular taxi company Uber which brought disruption to the whole taxi business.
He noted the fintech will significantly enhance the customer experience now offered by the conventional banking system, adding that regulation is among the issues that must be overcome by fintech startups. Many of the industry players are now concerned about regulatory problems that may slowdown the technological development in the next years.
Barclays, which is known to be open to new technologies, has recently joined a blockchain consortium formed by the R3 company. The group, which already includes such giants as HSBC, J.P. Morgan, Goldman Sachs, Citi and Bank of America, was established to investigate the blockchain technology and its potential applications in the financial industry.
With the rapid growth of the fintech industry, the number of companies valued at more than $1 billion is rising as well. Meantime, the majority of unicorns are from lending or payments sectors, which have lots of drawbacks today.
Bitcoin has also become a part of the fintech revolution, with large number of digital currency companies entering the industry. Many of them could compete with traditional banks by offering similar services and eliminating the need to deal with third parties.
In the beginning of this year, brothers Joshua and Philip Scigala launched Vaultoro trading platform that allows people to convert virtual currency to gold. It is the first company that let customers to trade bitcoin avoiding bank participation.