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Traditional banking to end by 2025 – Experts

By BusinessNews Staff on November 22, 2014

Information and Communications Technology experts have predicted that traditional banking will end by 2025 or 2030.

According to the experts, a market economy could readily emerge without banks, as we have traditionally known them.

Consequently, they urged banks to embrace technology and redefine their operation models to meet the emerging demographic and social change or lose relevance, as more core banking services would be delivered outside the regulated banking industry.

The ICT experts spoke in Lagos at the eNNovators Breakfast Series conference which was organised by Financial Technology.

Scores of industry stakeholders who gathered at the EBS included bankers, financial analysts, risks analysts and financial technologists.

They agreed that for banks in Nigeria to continue to be relevant, they needed to invest heavily in technology, reassert their roles in society and connect with millennial generation aspirations.

According to a communiqué issued after the conference, the current shape of the banking industry in Africa and particularly in Nigeria is inevitably going to change.

“The sheer scope and speed of evolution in customer behaviour, technology, changing market dynamics and aggressive non-bank competitors such as telecommunications companies and technology companies mean banking in the future cannot simply be a continuation of banking as it has been,” the communiqué read.

The EBS has as its theme as ‘2025: the end of banking as we know it.

The ICT experts noted that central banks across Africa required a radical orientation, pointing out that there was the need for central bankers to change their mindset and approach.

According to the communiqué, banking regulators appear “to be currently focusedon tactical responses and their strategic objectives for the future of banks and banking are clouded by political expediency and the ‘too big to fail’ debate.”

The communiqué quoted the Chief Executive Officer, Innovectives, an e-payment company, Mr. Emmanuel Agha, who presented the lead paper, as saying banks were facing rapid and irreversible changes that current models could no longer sustain.

The paper, which is a summary of PricewaterHouseCoopers’ research, has its theme, “The future shape of banking – time for reformation of banking institutions.”

H said while the PwC paper did not look at the end of banking as a grouping of services focused on meeting financial needs, it was imperative to look at the end of banking and banks as they were being currently know them.

He warned that a failure to adapt could also mean the end of some regulatory bodies and instruments.

According to him, the substitution of non-bank providers of banking services is a challenge, which does not reflect in banking regulatory frameworks, or yet – fully at least – in policy and regulatory change agendas.

Agha argued that, “the challenges and dilemmas posed by the parallel changes in technology, customers and revolution are not confined to the incumbent banks or even the non-bank pretenders. Banking policy and regulatory community would face its own challenges and struggle for relevance.

[Punch]

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