26 September 2016
Find out more

Bank economists warn of disruptive threat from mobile and crowdfunding

04 July 2013  |  46881 views  |  0 Blurry Couple walking

Banks that fail to invest in mobile technology and crowdfunding platforms risk being swept away by a wave of disruptive innovation warn economists at US bank BBVA Compass.

In its just-released second quarter economic outlook, the bank's economists argue that the financial industry faces its most dramatic transformation in modern history because of increased online and mobile device usage, which will make banks more productive but also boost competition from nonbanks.

"To succeed in this new hyperconnected and competitive environment, banks will have to follow a customer-centric approach and offer simple, user-friendly and effective products, with a high level of transparency and security," chief economist Nathaniel Karp writes.

Banks are ahead of the curve in mobile technologies, the bank's economists say, after examining a 2012 Federal Reserve Board survey about mobile banking.

"Mobile banking will increase the productivity of the industry as banks will have more information and ways to efficiently target users; however, these technologies are also bringing more competitors: highly sophisticated platforms with innovative business models and very low operating costs," according to the economists.

An even bigger threat to the traditional banking industry may yet come from the advent of new crowdfunding platforms, which the BBVA economists describe as "a disruptive innovation that commercial banks cannot ignore".

They recommend that banks pay close attention to this trend, strengthening their core business and investing resources in developing their own crowdfunding models.

"For banks, crowdfunding poses a challenge," states the report. "From here on, they will face a new competitor with lower operating costs, a different approach to risk management and a simpler product offering. To what extent crowdfunding platforms will displace commercial banks in the retail and small business segments remains to be seen. However, banks should be prepared for this trend and make it work to their advantage."

Read the full report:» Download the document now 952.5 kb (PDF File)
KeywordsSOCIAL MEDIA

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Third of Europeans use mobile banking - ING survey

Third of Europeans use mobile banking - ING survey

02 July 2013  |  9611 views  |  0 comments | 12 tweets | 16 linkedin
Mobile set to overtake Web at online bank ING Direct

Mobile set to overtake Web at online bank ING Direct

26 June 2013  |  6964 views  |  0 comments | 20 tweets | 9 linkedin
Big data to drive banks' mobile wallet strategies - Finextra research

Big data to drive banks' mobile wallet strategies - Finextra research

10 June 2013  |  19591 views  |  2 comments | 46 tweets | 35 linkedin
New breed of money spending advisory apps set to disrupt payments value chain

New breed of money spending advisory apps set to disrupt payments value chain

31 May 2013  |  7506 views  |  0 comments | 5 tweets | 5 linkedin
ING Direct backs Oz crowdfunding platform for social entrepreneurs

ING Direct backs Oz crowdfunding platform for social entrepreneurs

02 May 2013  |  5967 views  |  0 comments | 4 tweets | 2 linkedin
Crowdcube becomes first regulated crowdfunding platform

Crowdcube becomes first regulated crowdfunding platform

04 February 2013  |  8729 views  |  0 comments | 16 tweets | 4 linkedin
Kickstarter comes to the UK

Kickstarter comes to the UK

11 October 2012  |  5087 views  |  0 comments
Australian and UK regulators warn on crowdfunding risks

Australian and UK regulators warn on crowdfunding risks

14 August 2012  |  5905 views  |  0 comments
Crowdfunding site for entrepreneurs Symbid goes English

Crowdfunding site for entrepreneurs Symbid goes English

22 June 2011  |  5347 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Find out moreVisit i2cinc.comFind out more

Top topics

Most viewed Most shared
RBS tests demonstrate ability of Ethereum to support a national domestic payments systemRBS tests demonstrate ability of Ethereum...
12755 views comments | 49 tweets | 45 linkedin
Banks test blockchain for reference data managementBanks test blockchain for reference data m...
8437 views comments | 16 tweets | 27 linkedin
Swift beware: Ripple signs banks to global payments steering groupSwift beware: Ripple signs banks to global...
7701 views comments | 32 tweets | 16 linkedin
Deutsche Bank teams up with accelerator to back fintech startupsDeutsche Bank teams up with accelerator to...
7158 views comments | 12 tweets | 5 linkedin
Time has come to extract value from blockchain investment – new Finextra paperTime has come to extract value from blockc...
6860 views comments | 22 tweets | 16 linkedin

Featured job

to £100K base, double OTE
London, UK

Find your next job