The industry that benefited most from the economic reforms of the last twenty years of the 20th Century was the banking industry.
With the elections of Margaret Thatcher and Ronald Reagan three decades of good times began for the banking sector.
Now the good times are drawing to a close warns former Barclays boss Antony Jenkins who told a London audience how the banking industry faces an ‘Uber moment’.
While Jenkins focused on the fortunes of branches and frontline staff, the technological change facing almost all aspects of banking from tellers to risk analysts and upper management are all facing massive changes as artificial intelligence moves into fields that a few years ago most believed couldn’t be automated.
For the incumbent banks shareholders this is mixed news, on one hand it makes their existing operations vastly more profitable – the One Percent become the .001%.
On the other hand for the incumbents, the market is opening up new competitors and as Jenkins points out some of these disruptors will be the banks of the future. At the moment though established banks will do all they can to interfere with new entrants.
While interference will only go so far, the real challenge is to get ahead of the changes which is why financial technologies (fintech) has become such a hot topic in the last three years with major banks sponsoring or opening their own incubators, accelerators and hackathons.
Another important aspect in a changing environment is that of regulation and with the banks winning from the deregulations of the 1980s and 90s it may well be that we’re going to see a tightening on their powers as technology changes the playing field.
One thing is for sure, bankers are about to find times as exciting and challenging as many of the industries they displaced late in the Twentieth Century.