| We continue to pound the pavement looking for companies that are moving into the emerging world with mobile phone banking. That is clearly the future. Branch banking is dead. The real winner so far is Monitise. Few others are on the horizon. I am at Finovate Europe 2014 in London now and the companies which are showing off their banking applications this year border on the tedious and, I dare say, “goofy”. There is general disappointment among participants. There is a lack of serious and substantive new apps. On the other hand, the recent news from Alibaba on the mobile banking front is staggering. They now offer a full range of financial products: deposits, ABS, high net worth products, and they processed $150 bn in retail goods this past year. One senior banker from London put it well: “It’s all fine and nice for us to wonder what small app will get big, but let’s face it, “The world will eventually be run by Amazon, Google, Apple and Paypal.”
There is also a sense of doom for traditional banks — they seem to be institutionally incapable of incorporating these powerful and fast-moving trends. If they do not try, they are finished. The days of the three year procurement cycle, internal construction of backbones and endless turf wars among squabbling divisions must end or traditional banks are finished as a species. The apps come one after the other. Many will stick and get very big. Increasingly, banks that create smaller and autonomous horizontal divisions will win by acting quickly and adapting to the environment, such as outsourcing their technology. So far, the only bank to do this is UBS. Hats off to them. UBS gets it. |
Paul Schulte has had a career in equity research which spans 22 years on both the buy and sell sides covering the Asian and emerging markets. He also has 5 years of government policy experience in emerging markets. He has been frequently ranked in top-five…read more
