Research from Gartner, a technology research firm, believe the Internet companies such as Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Facebook Inc (NASDAQ:FB) play a significant role in shaping the banking industry for the future.
Tech companies are growing rapidly, and offering different products and services that bring changes to the life of consumers. The Internet revolution changed how people shop, bank, play, and accomplish their work.
Many speculated that tech companies would eventually wipe out the business of banks. David Furlonger, a fellow and vice president of Gartner emphasized that the speculation is far from reality. According to him, “The evolution of the Internet continues to raise questions about the continued viability of brick and mortar establishments in retailing and financial services. Increasingly, Internet-oriented mega-firms are seen as the commercial enterprises of the future.”
However, he pointed out, “As far as retail banking is concerned, it would be like trying to hammer a square peg into a round hole, this just does not fit.” He added, “The Internet companies would play a considerable role in shaping the banking industry of the future.”
Furlonger said the tech companies are masters of data management and analytics, with the capability to define agility from both technology and business model point of view, identify new opportunities, customer needs, and extend their value chain analysis beyond their core offerings.
He explained that tech companies can define and redefine business models as well as focus on how their business partners contribute as an equally strong differentiator in their business propositions.
Furlonger believes that tech companies would develop changes to shape the financial industry. The will offer financial services in the market and provide better information to consumers regarding the changes in the industry.
He stressed that it would be difficult for many institutions in the financial services industry to adopt the technological changes. Banks need to address a series of questions to address issues for them to be able to provide better services to customers. Some of the questions include: Do they need to look for help and partner? Or Do they need to fundamentally restructure?
Furlonger said,”When addressing these questions, institutions need to recognize the magnitude of what they are deciding. This is not a simple product or service decision – it requires the full commitment and total understanding of the entire organization. There is everything to play for, and leadership needs to come from the very top.”
He also identified some of the key issues confronting the banking industry including the failures of the banking system, regulatory compliance issues, and maintenance of security and privacy of customer data.