23 June 2018
Register for the webinar today

Fintech boom will lead to 30% bank staff cuts - Citi

31 March 2016  |  39364 views  |  0 citi bank

US bank Citi has forecast that the continued growth of fintech startups will mean 30% of bank staff will lose their jobs over the next ten years.

The bank's 112-page report, titled 'Digital Disruption', predicts that US and European banks will shed 1.7 million jobs by 2025 as the banking sector undergoes its own "Uber moment".

While banks themselves will not be replaced, their branches will as new technology enables them to do more online or via mobile. In addition, banks are under pressure to automate more back-office processes which will also result in job cuts.

The report, written by the Citi's Global Perspectives and Solutions (GPS) division, warns against overplaying the threat of banks' disintermediation at the hands of non-bank competitors, as was famously predicted by Bill Gates in the 1990s, but it also highlights the increasing investment that fintech startups are attracting.

Lending and payments are two areas where fintech firms have attracted significant capital investment. Almost half (46%) of private funding for fintech startups was for lending services, while payment platforms accounted for 23%.

Both areas have traditionally been lucrative for banks with lending currently accounting for 56% of the profits generated by the banks that Citi analysed. But while new peer-peer lending companies have brought in a lot of venture capital, they still only account for 1% of global loans. Similarly new business models have displaced just 2-3% of consumer banking revenues in the US and even less in corporate banking.

However the report notes that the trends vary between regions, not least in Asia. In China, says Citi, the transition from physical to digital financial flows has been "breathtaking" with 96% of e-commerce sales done without a bank's involvement.

"Incumbent financial institutions still have the upper hand in terms of scale and we have not yet reached the tipping point of digital disruption in either the US or Europe," wrote Citi GPS managing editor Kathleen Boyle. "Given the growth in fintech investment, this isn't likely to continue for long."

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

Citi creates fintech unit for mobile-first future

Citi creates fintech unit for mobile-first future

16 October 2015  |  13925 views  |  0 comments | 35 tweets | 36 linkedin
Will Uber be the Uber of banking?

Will Uber be the Uber of banking?

30 July 2015  |  19752 views  |  3 comments | 49 tweets | 34 linkedin
Citi builds blockchains

Citi builds blockchains

02 July 2015  |  11619 views  |  2 comments | 24 tweets | 12 linkedin
Citi to engage developers via fintech meetups

Citi to engage developers via fintech meetups

03 December 2014  |  4946 views  |  0 comments | 7 tweets | 4 linkedin
Citi CTO: Banks should 'do no harm'

Citi CTO: Banks should 'do no harm'

30 January 2013  |  10991 views  |  1 comments | 12 tweets | 9 linkedin
Citi accused of blocking start-up account over 'objectionable' blog content

Citi accused of blocking start-up account over 'objectionable' blog content

25 February 2010  |  6928 views  |  0 comments
Citi opens Dublin R&D centre

Citi opens Dublin R&D centre

30 September 2009  |  8669 views  |  0 comments

Related company news


Related blogs

Create a blog about this story (membership required)
Visit equensworldline.comVisit iliad-solutions.com/Visit http://go.jumio.com/finextraAd

Top topics

Most viewed Most shared
GPS raises £44 million to fund international growthGPS raises £44 million to fund intern...
26183 views comments | 7 tweets | 8 linkedin
Robots save Nordea from GDPR processing nightmareRobots save Nordea from GDPR processing ni...
9071 views comments | 10 tweets | 17 linkedin
BIS: Cryptocurrencies are an environmental disaster that could break the InternetBIS: Cryptocurrencies are an environmental...
8370 views comments | 18 tweets | 23 linkedin
hands typing furiouslyArtificial Intelligence at the changing fa...
7215 views 0 | 10 tweets | 5 linkedin
Visa says 5.2m payments failed during 10 hour outageVisa says 5.2m payments failed during 10 h...
6246 views comments | 14 tweets | 10 linkedin

Featured job

Basic c Euro 120K, Variable Euro 120K - full ben...
Paris prefered London possible

Find your next job