The first bankers
In Ancient Greece, the cities and later the citizens, placed their wealth in the temples and specifically in the treasuries, for safekeeping. With the development of trade and economic activity, the temples expanded their turnover. In addition to custody, they offered exchange services, as well as credit for financing goods. The loans bore interest and the customers were individuals and city-states.
Over time, turnover spread across the market. Outside the temples appeared the first 'bankers', who had tables on which they traded, first as intermediaries for payments and currency exchanges and later as lenders. The monopoly of the mediation by the temples was stopped by the bankers and ended irrevocably.
The technological invasion
Today, the financial-banking model of operations is interrupted by financial technology companies (Fintechs), and others.
As in Ancient Greece, so today, the 'invaders' chose the field of payments and transactions as the point of entry – the funds required for this work are few and the risks are limited. The 'bankers' set up tables in the market and the Fintechs digital platforms on the internet. The successful invasion of the first Fintechs encouraged similar financial technology companies to evaluate the broad food chain of banking, find vulnerabilities, and ultimately attack where they feel they have the upper hand.
As in Ancient Greece, the strategy of un-bundling banking products for the development of a small range of business activity is followed by the strategy of re-bundling, which aims to expand the range of products by creating a network of banking operations. . This is what the 'bankers' did, upgrading the exchange to a lending headquarters. Fintechs do this by expanding their range of digital products and securing a banking license where required. The existence of exclusively digital banks is now a fact. Some well-known names that did not exist ten years ago and that today serve over fifty million customers worldwide, are Nubank, Revolut, Monzo, N26, Neon. There are many others.
Today Fintechs exceeds twelve thousand worldwide, covering almost the entire banking turnover in its digital form.
But banking intruders are not limited to Fintechs. The modern digital banking market is also entered by the major online retailers, most notably Amazon and Alibaba (with MY Bank), and eBay (with its subsidiary PayPal). Utilizing their technology and unparalleled experience in online transactions and having a huge clientele at their disposal, these giants have entered retail banking for good.
It is now clear that the ecosystem is changing and regenerating. The strictness of the living space limit of each industry ceased to exist. Technology and retail companies are joining forces and / or competing, adding banking services to their store. Financial intermediation acquires new owners. Department stores – platforms with products and banking services are taking shape.
The creation of Super Apps
Modern big platforms – Super Apps – are potentially aimed at each of us. They include retail products, payments, deposits and investments, loans and insurance products to buyers, but also to traders who want to participate in the platform as sellers.
Each platform is an ecosystem in itself. The tech giants have come into the picture for good. An example is Alibaba's AliPay App. Other developing platforms are PayPal, Amazon, Google, Apple. A common denominator, a common starting point, is making payments with an upgraded customer experience.
According to The Economist, conventional banks have lost 30% of their international payments in recent years. Banks reacted in a variety of ways, developing significant capital, utilizing their own comparative advantages: banking expertise, large customer base with useful, relevant information.
In today's car ecosystem, the largest taxi company in the world (Uber) has no vehicles. The largest vacation rental company (Airbnb) has no tourist accommodation. Amazon has no stores and Alibaba has no merchandise.
Tomorrow's banker may not even have a bank. Banking services can be part of a product package offered by a technology company or a commercial house. Alternatively, the bank can be a department store of services and products, with a built-in financial proposal for each customer separately.
One thing is for sure. Tomorrow's banker will not be reminiscent of today.
* By Dr. Christos Patsalidis – Economist