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The new firms however, will play a considerable role in shaping the banking industry of the future.
“The evolution of the Internet continues to raise questions about the continued viability of brick and mortar establishments in retailing and financial services,” said David Furlonger, vice president and Gartner fellow. “Increasingly, Internet-oriented mega-firms are seen as the commercial enterprises of the future.
However, 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.”
Furlonger said that the digital mega-firms have many things in their favor. They are masters of data management and analytics. To all intents and purposes they define agility, both from a technology and a business model point of view. They are extremely adept at extending their value chain analysis beyond the core offering, with an eye to identifying new opportunities for business and highlighting specific customer needs that they might address.
They have the ability to define - and then redefine - the business models that they deploy while their focus on what partners can bring to their propositions stands as an equally strong differentiator.
Security remains paramount for all banking applications, and while for many of these new entrants, security and privacy of customer data is important, it’s not at the level of priority that would be needed to support a banking proposition. Performance challenges will also be key - failures of key banking systems can be catastrophic, and availability of all systems must normally exceed 99 percent. This may test the technical and economic models of many of the new entrants.
Furlonger said digital mega-firms will alter and shape the market by helping it develop, feeding the fires of change by making customers better informed and occasionally making catalytic forays into the market with niche financial services offerings.