Banking without banks: Exploring the disruptive effects of converging technologies that will shape the future of banking

Abstract

Social networks, mobile computing and smartphones are disruptive influences in the modern economy. They have brought significant market disruption to business-to-consumer (B2C) industries and they are putting huge pressure on business-to-business (B2B) services like marketing and advertising to adapt to a new digital consumer. Business banking, so far, has appeared largely unaffected, except perhaps by public hostility in social media after the 2008 crisis; however, it faces significant digital disruption as interoperable systems like TARGET2-Securities (T2S) threaten to disintermediate third-party suppliers, simplify network management operations and even automate custody banking to the extent that custodians could become obsolete. Understanding the way in which society is changing in the era of social computing and formulating a response to integrate the banking industry’s systems and business models into the digital economy are significant, but imperative, challenges, as giant newcomers like Google, Facebook and even Apple consider entry into the retail and, potentially, B2B banking markets. In an era when the public and mainstream media often perceive banking as negative, and corporations increasingly view banks as a cost of doing business as much as adding value, it is time to consider the prospect of banking without banks as they are known today. So, what is the future of banking?