Alex writes…..In the UK, relaxation of rules around banking licensing has seen a flurry of challenger banks spring up, mostly targeting retail banking. These ‘neobanks’ are mostly app-only banks–branchless, digital propositions that offer banking services at far lower costs than your typical bank. Many boast slick apps, allow freezing and unfreezing of cards at the touch of a button and can analyze customer spending in real-time and send budgeting nudges.
The banks are run solely through a smartphone or tablet with no physical branches. Partner firms plug into the apps thus creating a marketplace of services that range from investments and loans to energy and insurance.
And they are thriving, too. Founded five years ago, Britain’s Revolut has amassed nearly two million customers and was recently valued at $1.7 billion during its third round of funding thus making it the first ever digital-only bank to attain unicorn status. That’s nearly half as many accounts as those held by the country’s much bigger TSB Bank Plc.It is also the only British digital bank to operate across Europe so far. Strong growth in countries like France, Germany and Switzerland and the Nordic region helped drive its user base up by 50 percent in the last two months. Expansion plans are also underway in India, Brazil, South Africa and the UAE.
Fintechs tend to thrive in regions with large unbanked populations such as China. For instance in China, Alipay, mobile banking services provider and subsidiary of Alibaba’s Ant Financial, has grown so big that last year it handled more than $8 trillion in transactions–more than MasterCard’s and twice Germany’s GDP. PayTM from India which has just received funding from Warren Buffett is not only disrupting the payment business but getting into direct selling of mutual fund business . The app might also become a major player in the lucrative money market fund (MMF) business like Alipay which commands a bigger share than the country’s leading banks.
Most banks still have high cost structure related to employees and branches inspite of adopting technology.
I think this displacement will accelerate and the day is not far when we will call our banks,
New Technology companies
https://safehaven.com/tech/tech-news/The-Disruption-Of-The-Banking-Sector-Has-Already-Begun.html