Finansliv, Sweden: Cognizant’s Head of Banking and Financial Services for Continental Europe Looks at how new Technology and Changing Demographics will Transform Payments, Deposits and Lending

“The bank’s traditional function as intermediary of risk and transactions is being challenged,” writes Sriniketh Chakravarthi. “While the banks’ new disruptive competitors are still seen as operating on the fringes and with the disruption mostly visible in the retail side of things, especially in payments, the trickle of today could easily become a deluge pretty soon.” Excerpts:

“Changes in technology and customer demographics are leading to a fundamental shift in the way banks are perceived and used or, as it may be the case, not used. As such, innovative payments methods and the changing banking landscape, including the use of mobile devices, are rapidly leading to an atomization of financial services. We can already see how banks face disruption from new non-bank players including major tech companies.

There are three key tenets of banking that will be fundamentally challenged in years to come: transaction processing (i.e. payments), deposits and lending.

High proliferation of smartphones and tablets has led to the creation of a new payment landscape where non-bank actors process transactions between buyers and sellers in real time and, most importantly, without involving the banks.

As a growing number of non-banks enter the deposits arena and offer customers compelling alternatives, banks face a growing challenge in what was once their own exclusive core business area.

Technology is creating new and direct lending options for retail banking customers. Through a combination of technology, social networks and analytics, individuals are now able to lend directly to others through peer-to-peer platforms.

Giving millennials/digital natives the bank services they want is by no means a small task. The mobile bank, which be available around the clock and always has to be user-friendly, must also guarantee vault security at all times. To stay ahead of the curve, banks can and should look to the new competition for inspiration.”

Click here to read more in Swedish.