WEF: Tech Companies Disrupt Banks

WEF: Tech Companies Disrupt Banks

Technology companies like Amazon and Facebook are more threatening to banks` business than fintech, as the World Economic Forum (WEF) stated in a rece

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Technology companies like Amazon and Facebook are more threatening to banks` business than fintech, as the World Economic Forum (WEF) stated in a recent report.

As CNBC (cnbc.com) wrote in an article, small financial technology businesses are not having as huge impact on the banking sector as big technology companies.

“Fintechs have changed the basis of competition in financial services, but not the competitive landscape.”, said Rob Galaski, co-author of the report and Canadian lead for financial services at Deloitte, in a statement quoted by CNBC.

“Fintechs now define the tempo and direction of innovation in financial services, but high customer switching costs and the rapid response of incumbents has challenged their ability to scale.”, as he elaborated.

The report found that banks had difficulties catching up with technology companies when it comes to developing technologies like cloud computing, artificial intelligence and big data analytics, as the publication explained.

For example, Amazon Web Services attracted financial organisations like Aon, Capital One and Nasdaq to Amozon`s cloud computing business, as CNBC reported.

“The ability to be a fast follower has proven more important than being first for large financial institutions.”, as Galaski commented.

However, some experts like Brigid McDermott, IBM‘s vice president for blockchain business development, argued as quoted by CNBC:

“Some of the start-ups that are coming in don’t necessarily understand the scope of the transactions that are running all the time, and when you think about banking as an $8-9 trillion industry – that’s a lot of transactions.”

In June, CNBC reported that IBM is buiding its “Blockchain-as-a-Service” platform. The service will reportedly facilitate international trade for small and medium-size enterprises and will be used by seven of Europe`s largest banks.

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