Fintech, blockchain and regulatory changes are driving the finance sector towards a fundamental change. It is not so difficult to predict what will happen so much as when it will happen. History doesn’t repeat itself, but we can get ideas from other industries. So, let’s try to predict what will happen in the finance sector in the foreseeable future.
Before we look ahead, let’s first look back at how changes and disruptions have unfolded in some other industries:
When we look at the finance sector, banks obviously play a central role. When we talk about banks, we don’t talk about companies that offer one or a few products – in reality, banks are massive black boxes that offer hundreds or thousands of products, and mix them in a way that often obscures their visibility from outside.
So, when we think about the future of the banks, the thing to consider is not whether banks will survive, but rather which banking services and roles will be relevant in the future and who will offer them. For example, banks have very obsolete IT, ineffective processes and inflexible business models, and these can become obsolete rapidly. But money, assets and positions in finance instruments don’t lose their value overnight.
Based on the preceding observations, we can now make the following predictions:
As mentioned earlier, the hard part to predict is the timing. Change has come slower to the finance sector compared to many other industries, even though all the above-mentioned components are available.
What’s missing is new business models. Some people have compared ICOs to the Year 2000 dotcom bubble, and indeed there are similarities. It is worth remembering that many companies rose from the ashes of the dotcom bubble that now dominate the world. When the ICO bubble bursts, we will really start to see new FinTech and finance companies, and we probably see companies that will have a major role in the finance business for the next few decades.
The article first appeared on Disruptive.Asia.
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