The Big Boys are not rattled. They are adamantly not rattled. Dinosaurs probably felt pretty confident prior to that asteroidal or volcanic event that spread a layer of iridium-rich rock across the planet. Most earthly life was able to ride out the explosion, whatever its source. But not the largest ones that had dominated the planet for 65 million years. The largest financial institutions, some of them with hundreds of years of history, are in the same position. They don’t know if FinTech is an asteroid that has already hit, or if the financial innovations disrupting the marketplace are some lesser event they can absorb, merge, and stomp forward—dominant and unsatiated as ever. T-Rex, too, had “what, me worry?” looks on their boulder-sized faces, even as they were about to, literally, start pushing up daisies.
Survival Reinvention DNA
FinTech is the financial explosion banks are hoping to outlast. Or, fight, or adapt to, or integrate. They say that, though technology is shifting, bank fundamentals are not. Stephen Bird, CEO of global consumer banking at Citi, founded in 1812, says that they have lasted centuries because of their ability to adapt.
“The benefit of being 200 years old is that we have a survival reinvention DNA and that is core to who we are,” Bird said during the annual Hong Kong FinTech Week conference. He noted that established banks will need a “tense and deep re-engineering” to enhance “speed, convenience and trust.”
For big banks, the threat is still more of an opportunity. In the U.S., Citi has gained an edge by developing new ways to service customers by co-creating—listening closely to thousands of clients and developing the most rapidly growing mobile base in all of North America.
Big banks are still doing well, according to the most recent reporting periods. Citi, Bank of America, Standard Chartered, Credit Suisse, and HSBC, for example, all reported third-quarter profit increases over last year’s third quarter. Deutsche Bank’s earnings, however, slumped. Is this the beginning of the end? Or a small blip on the path of continued global supremacy?
Fintegrated or Decimated?
“The rise of digital innovators in financial services presents a significant threat to the traditional business models of retail banks,” said consultancy McKinsey & Company in a 2016 report.
Banks insist that money management remains at the heart of financial institutions. But they acknowledge that the swiftness of technological development can be intimidating for large, slow-moving institutions. To combat that, the largest banks have hired people from companies such as Paypal and Amazon. Big banks are gambling these innovators possess the right mindset to help them survive into the next financial epoch.
“We must fintegrate,” said Bird.
Their ability to do so will mean the survival of their species. If not, there are many adaptive, hungry new entities ready to take their place. As Chung-Tat Cheung said about the end of T-Rex:
“Regardless of what caused the extinction, it marked the end of Tyrannosaurus rex‘s reign. And opened the door for mammals to rapidly diversify and evolve into newly opened niches.”