Platforms challenge FS profits

By Teamspirit on Monday, 30 October 2017

A new report from management consultancy McKinsey has suggested that the traditional banking sector may be the next to face the ‘Amazon effect‘, as international platform companies such as Alibaba, Rakuten and Amazon expand into the distribution side of banking.

The e-commerce giants no longer confine themselves to the territory of selling products – they are managing customer assets, lending money, processing payments, issuing credit cards and hailing rides. Offering a huge range of goods and services through a single access gateway, the platforms offer a clear advantage for consumers.

McKinsey argues that the size of these platform players make them a far greater digital competitor for traditional lenders than smaller fintech firms. In the face of such a growing threat, it’s clear that the banking industry’s fundamental advantages are consumer trust and exclusive access to valuable customer data.

If they were to utilise this data and move to a more digital environment, following in the direction of the platforms, banks could increase their return on equity closer to 10%, McKinsey estimates. The question is - how will banks develop these platform capabilities, and will they be open to the idea of partnering with platform firms?

Related News

Thu 21 Mar 2024

In marketing, are we losing sight of ‘Business to Human?

Read more

Fri 9 Feb 2024

Going social for advice. Should advisers respond… or join the party

Read more

Tue 2 Jan 2024

2024 Signals Report

Read more

Wed 22 Nov 2023

Proud to announce our new pro bono partnership with Lurgan Credit Union

Read more