The former chief executive officer of Barclays has warned that banks could be faced with their own "Kodak moment" by falling into irrelevance if they fail to keep up with the pace of rapidly developing fintech technologies.
Antony Jenkins, who was the group CEO of Barclays from 2012 until he was sacked in 2015, said that the opportunities produced by digital ledger technologies such as blockchain could result in efficiency savings of between $80 billion-$110 billion. But he also warned that banks which failed to keep up with the pace of such technology could be faced with an existential crisis.
"We're really at the end of the beginning of what we see as a revolution driven by technology with financial services and fintech is really a too narrow categorization of what's going on here," Jenkins told CNBC at the Money 20/20 Europe fintech conference in Copenhagen on Monday. "As the technologies develop and season, they're going to create a totally different way of doing banking and financial services."
In 2015, the former Barclays boss warned that banks were approaching an "Uber moment" because of new financial technologies. He predicted that the financial services would see a decline in staff and branches "by as much as 50 percent over the next 10 years". Today he warned of a similar threat.
"Now we will see the possibility – not necessarily the probability – of what we call a 'Kodak moment', where increasingly banks become irrelevant to their customers," he said. "Banks can avoid that, but they have to act now, and what they really need to do is think about innovation, but also transformation, doing something radically different."
Jenkins added that cryptocurrencies like bitcoin, and even artificial intelligence, were only the beginning for the "transformation" in banking he envisages. "This is just in the footprints of what's going to happen here. As these technologies season and develop, we can imagine total transformation of the banking system, using blockchain for example, in a world where banks don't really exist anymore."
He was joined by Oliver Bussmann, the former chief information officer of UBS. Bussmann echoed Jenkins's comments, adding that blockchain was transforming finance by removing the need for middle men. "It's a new business model emerging which is decentralized, where the middle man is disappearing and this has been now introduced as an equity, so a lot of startups are now using the cryptocurrency to get funding and using this as a currency to get paid and also provide services," Bussman said. "So there's a different incentive now being set up that didn't exist before, and this is the reason we are seeing a rapid increase of this kind of business right now."
Among the recommendations Jenkins and Bussman have made for this banking 'transformation' are open banking platforms which allow third parties to manage their finances, blockchain technologies like artificial intelligence and cryptocurrencies, and headhunting for experts in areas of AI, big data, distributed ledger technology, and cybersecurity.
Their warnings to the financial services industry are timely. Incoming European Union regulations will mean that bank customers will be able to use third-party non-banking firms from corporations to smaller fintech companies to perform payments activities and/or gain access to customer data. The Revised Payment Services Directive (PSD2) comes into force in 2018. Experts have argued that this could result in the loss of millions in revenue if corporations such as Amazon are allowed to become payment service providers.
After Jenkins was ousted from Barclays, he created a fintech business called 10X Future Technologies in 2016. Following Bussmann's departure from UBS, he founded the fintech firm Bussmann Advisory.