At Silicon Republic’s Inspirefest 2017, Hazel Moore, the chairman and co-founder of international investment bank FirstCapital, stated that banks are completely wasting valuable customer data. She revealed how banks are struggling to digitalize their services and products by embracing smartphones, big data and emerging financial technologies.
Banks and major financial institutions are becoming irrelevant as they struggle to appeal to millennials and the majority of the general population relying on mobile networks and web-based platforms to conduct operations relating to money.
Banks are Failing to Serve Millennials
A recent study conducted by Facebook IQ, a research group within Facebook Inc., revealed that 92% of millennials don’t trust banks with their money and that over 70 million people are hesitant towards using traditional settlement methods such as credit cards as alternative financial technologies and service providers offer better rates, higher liquidity, efficiency and security.
Thus, the Facebook IQ research team stated that banks and financial institutions must adapt to the rapid growth of the mobile and online industries and meet the demands of millennials.
“To connect with Millennials, financial services will have to take a fundamentally new approach. Millennials want to entrust their money to a true partner that shares their values and sees them succeeding together as they amass savings and unlock their greatest earning potential,” read the study.
Why Banks Will be Irrelevant in the Near Future
Like Facebook research team, FirstCapital chairman Hazel Moore firmly believes banks are wasting their resources on technologies and financial services that aren’t efficient and applicable to modern consumers. She further emphasized that technology companies, fintech startups and major corporations like Ant Financial that are beginning to gain significant market share over the world’s unbanked and underserved population, will inevitably overtake banks as they become irrelevant.
At Inspirefest, Moore also expressed her concerns over banks’ inability to target mobile phone users. She stated, “we check, on average, our smartphones 46 times a day. For those who are 18 to 24, it is 74 times a day. We are surgically attached to our phones and we can do amazing things with our phones. And they [banks] know so much about us on the apps that we use.”
Despite the resources banks have in terms of consumer data, user information and activities, banks still struggle to develop applications or services that can be helpful to users.
In fact, messaging applications like China’s WeChat are settling more online transactions than banks. Over the Chinese New Year in 2016, WeChat processed 8.08 billion transaction over the course of 7 days. The weekly volume of peer-to-peer transactions on the WeChat platform was more than PayPal’s annual transaction volume of 4.9 billion transactions and overwhelmingly larger than local bank online transactions in China.
As Moore states, the demand for online payments and mobile services is at an all time high. She expects this trend of mobile usage to rapidly increase over the next few years and if banks fail to capitalize against startups and tech firms with its resources, it will lose its consumers and market.
“Almost every day, there is something about me going through my bank, and yet what are they doing with that data to make my life easier or to provide new products and services that surprise and delight me? Absolutely nothing. What a wasted opportunity,” she said.
Bitcoin Startups Are Capitalizing Against Banks
In contrast, the bitcoin market has seen a massive emergence of remittance and payment focused startups such as Coins from the Philippines, Coinplug from South Korea and Bitspark from Hong Kong that enable users to operate as their own banks.
Coins for instance, which operates in Malaysia, Thailand and the Philppines, allows users to settle utitility bills, send payments, and withdraw money all with bitcoin on its minimalistic mobile application. Coinplug transformed every convenience store in South Korea into a bitcoin ATM, enabling users to purchase and sell bitcoin directly from its mobile application.
Bitspark, a remittance-focused startup, operates in remittance-heavy markets like Indonesia and Vietnam to allow expat workers to send bitcoin to their families in their home countries with substantially lower fees, higher security and faster settlement speeds compared to local and international banking systems.
Do you think banks are becoming irrelevant as bitcoin and fintech startups emerge? Let us know in the comments below.
Images via Business Korea, FirstCapital
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