Content adapted from this Zerohedge.com article : Source
Authored by Huw van Steenis via The Financial Times,
Harnessing blockchain will be just one chapter of a dense book at Davos
Bitcoin and blockchain are likely to dominate discussions at Davos this month. But there will be a far deeper deliberation about the wider disruptive impact of technology on banks.
Financiers used to think that the post-crisis regulatory burden would make financial services less appealing for new entrants. But now they fear that non-banking rivals may target more profitable areas and skim the cream in areas such as payments or lending. Central banks are concerned too. The Bank of England recently war-gamed the impact of fintech on banks' business models for the first time in their stress tests, suggesting UK banks could lose £1bn of profits to new competitors.
The picture is changing fast, with US deregulation and the finalisation of the Basel rules. Banks have had to focus on repair and new rules since the crisis, soaking up their change-the-business technology budgets. Now, they can potentially free up resources to focus on maximising the potential of technology
A more intense focus by banks on potential disruption has four big implications.
First, banks will step up their spending considerably. According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020. This implies a more than doubling of transformation expenditure over the coming four years. There will be deep seams of opportunities to mine. For instance, cyber risk is currently viewed as the greatest risk to the financial system by the Basel Committee. Tech firms and consortiums which help detect fraud, solve authentication and the protection of data from cyber risks will flourish.
Secondly, this spending could substantially boost banks' productivity, and profits. I took a straw poll of executives from a range of firms in the World Economic Forum's disruptive innovation in financial services group. This suggested they are looking to automate up to one-third of all of their activities in the coming four years — and 2018 is likely to be pivotal for blockchain as pilots, such as at the Australian Stock Exchange, get the green light.
Cryptocurrencies will capture the imagination of users and fears of policymakers. But harnessing blockchain will be just one chapter of a dense book. I suspect how banks use machine learning and rudimentary artificial intelligence to improve customer experience, nudge sales or improve efficiency will have a larger impact on the bottom line than blockchain in the next five years. But with Big Data comes Big Noise: companies will also need help to structure, manage and analyse the new data to use them effectively. Those banks that embrace innovation could have a productivity dividend and mitigate the risk of disruption.
Thirdly, the battle for customers will get far more intense, making it more challenging for start-ups looking to build consumer brands. The battle between every start-up and financial institution comes down to whether the start-up gets distribution before the incumbent gets innovation, as venture capitalist Alex Rampell likes to say. Banks will drive up the cost of customer acquisition for start-ups who will increasingly struggle unless they build network effects and scale very quickly. Roboadvisers and peer-to-peer lenders will be on heightened alert. Some start-ups will need to rethink their plans to disrupt and look to form partnerships instead.
Finally, the biggest fear is whether banks, or other financials, may get Amazon-ed. A recent WEF report suggested that finance is more likely to be upended not by nimble fintech start-ups but by established big tech firms encroaching. Changes in financial regulation, such as a lighter touch fintech charter being examined in the US or the second payment services directive in Europe, could potentially make this more likely. The tech giants have the brands, customer reach, digital processes and flair to develop good products, and to take swift advantage of any regulatory changes.
A recent survey by Bain across 22 countries suggested customers are open to potentially buying financial products from tech firms, leaving banks vulnerable. In China, leading technology firms have already moved into banking and insurance at scale. Ant Financial, part of Alibaba, is already as big as the ninth-largest US bank.
While central bankers fret about bitcoin, this is what financiers will really be discussing this year.
"Banks could loose a $1 billion to fintech" that is the best possible case for the banks. I would say it will be 10 to 100x bigger than this! I don't really trust the big tech companies, but if I had to choose between a big bank that's broke or google with billions in the bank, I think I would store my money with Google.
FinTech will take over. Confince in banks is diminishin. GS, JPM and other still give their clients buy signals, when they actually sell on their buying
GS is one of the leading companies implementing FinTech.
They will be strong for a while...at least until alternatives like BTS or other crypto based entities eat their lunch.
Ex GS employees run most central banks. I think with those resources and insiders they will be around for a long long time.
That doesn't mean that they dont give recommendations to sell, when they buy behind your back. GS is positioned very well, they have the connections and info.
Just a different master there.
Google isnt much better than the banksters. Nor is face book. While they put a happy, caring face on in public, they are just as greedy and ruthless as the banksters.
Decentralization will take them down just like the banksters.
I think you are completely correct. Although given the choice I think the tech companies will last longer and innovate better than any bank. They will all to be surpassed by crypto hopefully
To an extent, they are just as bad as the banks (censorship of any information that they deem unfavorable). Even in the political realm, we've seen Facebook and Twitter censor numerous politicians because of their political views.
The amazon effect is similar to the walmart effect.
With the walmart effect it was mop and pop stores that were affected whereas with the amazon effect it is the established larger companies that feel the effects. But the root cause is the same.
When you can't or won't adapt to new market conditions, you will suffer.
Some banks will surely adapt. Others won't.
Those who realize that we will see a restructuring of the financial world due to blockchain technology and embrace it stand a better chance. Those who try to fight it will be buried in debt while they wage a losing battle.
The message is simple, say bye bye to the bankster controlled world.
Thanks for the post.
Keep Steeming!
I agree @wdougwatson.
They are going the way of Blockbuster and there is nothing they can do to stop it. The power of decentralization is simply too strong. No entity on the planet is powerful enough to stand up to millions upon millions of people taking their attention elsewhere. This is what is happening around the world with the introduction to blockchain.
I'm not sure that they will run out of business but certainly it is their time to get hit by the internet.
Some aspects of their business aren't going to change though.
Banks are supposed to get their income in part from lending and crypto doen't change that. What it does change is how money is no longer created from thin air when they do.
yep. it is gonna flip the world as we know it upside down.
The tax man could offer a lifeline to the banks by demanding taxes have to be paid in fiat. (property tax, vat will be hard to avoid) Then people would have to hold some fiat just to pay the GOV. Either way I would expect traditional banks to sink to a fraction of what they currently are.
Yeah. The words all debt public and private come to mind.
That's the only reason fiat still exists.
But once the majority of the money supply isn't centralized it will definitely cut them down a good bit.
And that will be a good day : )
Indeed sir.
While I like to see the revolution happening I´m concerned at the same time about all the jobs this will destroy after all. Not the big positions in the top but the ones of usual people who are working in your local bank simply receiving and handing out your money.
I think this thing could become a second industrial revolution with a lot of unemployment and huge changes going through our society. But any great change always hurts in the beginning!
You are right of course and that is why we have to do what we can in the way of aiding people in simple onboarding into the tokenized world.
This is why I have become a Steem evangelist. This is what Steem was invented for, right? I try to steer everyone who ask about cryptos away from btc and eth in the beginning and towards Steem.
I also try to break down the inevitability of the tokenized world to skeptics. In fact drawing comparisons between this and the industrial revolution might be useful in the future.
Hi @steembusiness. Typically, with technological/industrial revolutions, we've always seen a massive amount of unemployment because there will be groups of people who don't adjust to change in the market. However, after the recession there is a synergistic phase in terms of laws and growth which allow a "golden age" to form.
You're right, great change always hurts.
The old banking model is being destroyed. FinTech is about 15 years old and making more progress each day. While on one hand this has made the finance world more profitable, it does put many entities at risk.
One of the biggest concerns they should have is blockchain. This is going to each the banksters lunch. We are going to see billions of people added to this tech in the next 10 years, many of them just entering the banking world. Of course, they will never open an account at a traditional bank. Instead, they will be on the blockchain banking via that. This the banksters cannot stop.
Plus, each person who has crypto, that is less wealth held in foat which means no need for banks....
The Internet is coming to money and it tends to eat up the established firms that get in its way.
No one was ever able to stop innovation and it´s not going to be different this time. We´ll see great things happen with ways more functionalities and comfort being added to the way we handle money :)
I think that at this summit they will make a collective push to fight against progress. Of course we all know what happens when you fight progress.
@zer0hedge, you know why I don't like banks?
When you have a new technology, instead of work in something better, they focus on destroy the competition with lobby with government. That, sorry for the expression, piss me off.
As you said, they need to improve their system and become better and better, not focus on destroy something that is better than the bank system.
Bankster Plan 101:
Exactly @taskmaster4450. Is exactly the way that you said in your posts.
We need a separation of banks and state.
I think that two things will happen in Davos. For those who don't know the conference if is from 23-23th January. I think at this meeting regulations will be discussed and possible innovation plans also will be discussed.
I personally will unload my holdings day before the event.
Thanks for sharing this info !
I am also very nervous about some kind of coordinated effort to harm crypto coming out of this summit. Although I won't unload I am Hodling for a longtime, hopefully Davos is only small bump
@zer0hedge...yeah bro present the banks felt fear about the present market cap and the investings less due to the world look into the cryptofields and most of the peoples are avoid to deposit in the banks all were maximum peoples intrested to invest in the cypto compared to the bank investments crypto investmesnt is a very hufe profitble if the market gets high after the investment its a very easy and profitble opertunity to get a huge profits within a very short period ..so definatly bank get feard due to this market cap if deposits get to the banks then only they give loans to the peoples and also the roatate money in the socity but with out getting deposits their is no way to get profits ..due to this block chain and cryptocurrency causes they get sufferd....
According to IDC, only about a quarter of US bank technology budgets is spent on digital transformation, as opposed to business as usual. They expect this to grow to nearer 40 per cent in 2020. This implies a more than doubling of transformation expenditure over the coming four years. There will be deep seams of opportunities to mine. For instance, cyber risk is currently viewed as the greatest risk to the financial system by the Basel Committee.
Could cyber risk include blockchain destroying their business?
@tony10 I don't think blockchain destroying their businesses would fall under a cyber risk. However, we need cyber security even in businesses that deal with Blockchain technologies. With the increasing amount of users flooding to exchanges we're seeing a parabolic growth in the demand of cyber security professionals.
Yeah yes security is a most importent thing in the saving of a wallets...present in the market most of the sites was came and trade all the coins...but the costs were differnt ..in different sites...so the mosts of the sites have less quality ....so if we choose the better wallet with the best site is most securitu for us....
Cyber security is a great issue. Although big companies constantly work on improving this area- it's not nearly that simple. Blockchain gives us a revolution in this area, but the technology is evolving further, so encryption also should.
Giving people more choice in their financial future is good for the people but bad for the dinosaur bankers. Those who learn and move forward with what is going on will be the ones who survive. There will be smaller banks and ' traditional ' banks that end up going out of business or subject to take overs but like with all things the strong will survive and they will survive by listening to what is going on and being amongst the first to embrace it. Technology is ever evolving and it would be foolish to stand still and hope you can survive.
My first reason for fearing banks is due to their ability to appropriate, via an almost infinite number of fiscally criminal engagements with us, 99% of our wealth, and my second is that when they adopt one or another of these ‘peer-to-peer’ information management/ledger systems (and the only peers with which the banks will transact on this peer-to-peer basis will be their own fellow banks & their other crocked cronies in the greater military/industrial/governmental fraternity) & while this adoption will massively increase their profitability, they will most assuredly not eliminate any of their vast lexicon of criminalities – such as fractional reserve banking which not only allows them to print money out of thin air, but by manipulating interest rates & the amount of money in circulation eventually plunge the whole economy into bankcruptcy, at which point they first repossess the bankcrupted properties at pennies on the dollar, after which they resell them for a king’s fortune.
In short they turn their money-out-of-nothing into hard, tangible wealth reclaimed from us naïve dupes.
Another of their more heinous crimes is loaning to governments at compound interest. Not only can governments print their own money both debt & interest free, but why agree to repay at compound interest ?
The manner in which the banks will continue their criminality will be via SMART CONTRACTS !!!
Which of the naïve amongst us would not like our own dear bank to not only get on board with this sexy blockchain thingy, but allow us to sign ‘smart contracts’ with them too -
It is becoming increasingly clear that Bitcoin has been hijacked by the Bankers – a former chairman of the Bilderberg group is now on one of Bitcoin’s core development teams namely Blockstream.
HASHGRAPH … HASHGRAPH… HASHGRAPH.
Although HASHGRAPH is already an in-use and VASTLY SUPERIOR information management system in comparison to ALL BLOCKCHAINS & ALL BLOCKCHAIN-BASED products, the founder, Leeman Baird has already granted license for its patented use to the Credit Unions of America.
If we the people aren’t willing to pay a reasonable amount for patented use of this near-perfect decentralising system of information management, but all of the big banks follow their lowly cousins the credit unions and adopt it before we do WE ARE SKREWED.
Many of the most ardent advocates of Bitcoin have said all along that we must watch for something better to come along …. Let’s all urge Leeman to create an alternative currency system on his invention - So what if we have to pay a patent fee when any such fee could save/create users vast amounts of time, money, expertise & effort ….. AND SUCCESSFULLY ALLOW US TO CIRCUMVENT THE CURRENT SYSTEM OF ENSLAVEMENT.
Actually, we could crowd fund ourselves & pay Swirlds (Leeman Baird's company) the licencing fee & build a vastly superior alternative currency on a HASHGRAPH system ourselves without waiting for him to do it for us.
@zer0hedge amazon may have its share detractors but there is no doubt about their customer orientation. There's a joke that does the round about banking service being an oxymoron and it's true to an extent - any kind of service from banks is usually terrible and customer orientation is even worse. That's one reason why people hate banks ...
Given how customer centric amazon is, if they do start financial services, I'm sure a lot of customers would buy into them.
This is a great thought provoking article.
What I personally find particularly interesting is the rapid transformation in developing markets such as Vietnam, Indonesia and India. These countries don't have decades of trust built up in brand-name banks, so the disruption can be much faster. If a country with 200M+ people suddenly started transferring their money digitally via wearables, what impact would this have on the banks..?
The pace of development within the banks needs to be stepped up, rather than just talking about it...
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Their fear is right! It is the result of a century monopoly backed by violence! this is the best thing that can ever happen to the world!
I wonder if they will ratchet up the violence to stay #1? Nothing would surprise me
Yes it is. The banksters think they can still maintain control. It is not true. Blockchain is far more powerful than they are.
Their world run by fiat money is coming to an end.
Soon they may realize the only way to keep some power is to hop on board the train themselves.
Your very correct, they are crapping themselves, cheers
And they can't do anything about it haha
I’m sure they will try with a little help from Various governments, bastards. Cheers for your reply mate thanks mike
They can't do much. The normal people who watch the mainstream media are going to believe that its a scam so it they won't get it. But then the people who already know what's up, they'll find a way. The government is made up of who? Us. We are the government. We will have control.
I am inclined to believe that banks need to be restructured, because modern financial operations can contribute to the disappearance of the sphere as such.
I have no compassion for the bankers.
Banks should twist their previous way of work to such that may include operations with electronic curency.
very useful news & work work ............
Thanks friend @zer0hedge for sharing so informations posts.
Useful news dear thank you i appreciate your efforts i followed you waiting for more
This is a very informative post
What is conditions of bitcoin now? Possible to rise volume next week.
great news... nice post for good sharing
indeed they should fear the blockchain its power back to the people , am sure we will now see more banks intergret .
The truth is that some banks will go the way of blockbuster, too resistant to change and they will be obliterated. While others will change and adapt to blockchain. I think it is important to realize that there will always be a need for banking systems in any type of economy, we just need it to be decentralized and transparent.
How could banks adapt to blockchain?
Blockchain by its definition is decentralized which means that control is spread out...something the banks arent going to agree to.
Do you see Goldman or JPM doing that?
Sure they will set up their databases and call them blockchain but they arent.
Watch out for the bankster con game.
Thank you for the clarification.
Banks use digital money to control people and they say its the best thing ever, a non-bank use digital money to free people and the banks say its the worse thing ever... Banks, the thing you love to hate!
Banks are always afraid to lose their income when people realizes they're just being used by this institutions.
SALT, ETHlend, etc, anyone?
Amazon is getting scary itself, it's growth has been massive. Blockchain will eventually keep hammering nails in the coffin til it's all closed up.
I would be more worried about google banks than Amazon banks
No one can stop crypto....
maybe the banks should start looking into their enormous fees and intrests.
They are sky high in Denmark thats for sure.
The governments are going to do everything in their power to stop decentralisation. The bank's fractional reserve system is the most messed up thing in the world. They are going to be obsolete soon and they are the ones who took advantage of us. They deserve it even if they do get "amazon-ed"
Thanks for your Cryptocurrency news @zer0hedge
Regardless of rules and regulations, innovators are going to innovate. If banks don't get their heads out of their asses, they will get Amazon'd. We know for a fact that when technology threatens your business, it will usually end up KILLING it UNLESS you get with the wave. However, banks NEED competition. They've had far too much time to continue with business as usual with no competition.
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