Based on presentations by Jorge Soley, including during the 15th Banking Industry Meeting held at IESE Madrid. Also, “How large is the disruption in banking?” by Xavier Vives, published in IESEconomics, and his paper “Digital Disruption in Banking,” published in the Annual Review of Financial Economics (2019).
What’s the future of banking?
Evolving consumer expectations, tech innovations, regulatory changes and new business models are fast reshaping the global banking industry. Fintech and platform-based competitors are eating into the market that used to be dominated by a few major international banks. As the rules of the game change, who will emerge as the winners?
Traditional bank
Big tech
Fintech
A framework that works for all?
Disruption ahead
Gaining ground
Player advantages
New players, new tech and low benchmark rates are already seeing: • erosion of incumbents’ margins • increased competitive pressures
Incumbents will have to restructure and consolidate, owing to: • overcapacity • low profitability • need for heavy investment in IT
Whether Big Tech dominates will depend on: • the regulatory environment and compliance costs • the capacity of incumbents to monopolize the interface with customers
The winners will be those that achieve: • superior innovation • a strong reputation • customer loyalty and trust • large quantities of customer data that they leverage effectively
Customers have the right to request that their personal data be shared with other nonbank entities and third-party payment service providers.
At least two of these three authentication methods are required for online payments: (1) customer password or PIN; (2) customer phone or token; (3) customer fingerprint, voice or face recognition.
WHO'S MOST AFFECTED?
The EU Payment Services Directive was updated (PSD2) precisely to account for the new, nonbank providers of payment-and-account services that have entered the market since the financial crisis. New parts of the directive have recently come into effect. Here’s what’s involved:
Banks lose exclusivity to their databases – although the requirements of the directive cut both ways, and nonbank, third-party providers have their own compliance challenges in ensuring the security of the said data before banks share it.
Enhanced data privacy and security
Primarily banks, as they have to behave more like the platforms that represent their biggest competitive threats.
WHAT IT MEANS IN PRACTICE
Data portability to give customers more control over their own data
Indicates services offered on top of or in collaboration with existing financial institutions
SAVINGS INSTRUMENTS
Alibaba (Alipay), Tencent / China    Baidu / China    Vodafone M-Pesa / East Africa, Egypt, India    Mercado Libre / Argentina, Brazil, Mexico Line, Rakuten / Japan  Google / Worldwide  Amazon, eBay (Paypal) / Worldwide Apple, Facebook, Microsoft / Worldwide
CREDIT
Big Tech firms both cooperate and increasingly compete with traditional banks in offering financial services.
Principales big tech y zonas de influencia
PAYMENTS
Indicates new operations introduced outside the traditional banking networks
Established customer base
Government-backed guarantees (for capital, consumer protections, etc.)
Experience and expertise in regulation and risk management
Economies  of scale
Brand recognition
A broader range of networked, interwoven, data- driven services
Superior technology, free of legacy systems
Operate outside some regulations that exist for traditional banks
Ability to attract the best talent and innovate
Ability to attract the best talent and innovate
Traditional bank
Enjoy better reputation
Superior technology, free of legacy systems
Operate outside some regulations that exist for traditional banks
Gaining ground
Disruption ahead
Player Advantages
Based on presentations by Jorge Soley, including during the 15th Banking Industry Meeting held at IESE Madrid. Also, “How large is the disruption in banking?” by Xavier Vives, published in IESEconomics, and his paper “Digital Disruption in Banking”, published in the Annual Review of Financial Economics (2019).
What’s the future of banking?
Fintech
PLAYER ADVANTAGES
Big tech
Bancos y fintechs tienen distintos puntos fuertes y débiles. Las big tech, por su parte, presentan las ventajas de los dos anteriores y pocas desventajas.
Haz clic sobre las ilustraciones para ver las fortalezas de cada sistema
Traditional bank
Experience and expertise in regulation and risk management
Economies of scale
Established customer base
Operate outside some regulations that exist for traditional banks
Big tech
A broader range of networked, interwoven, data- driven services
Superior technology, free of legacy systems
Economies of scale
Ability to attract the best talent and innovate
Ability to attract the best talent and innovate
Superior technology, free of legacy systems
Operate outside some regulations that exist for traditional banks
Enjoy better reputation
Whether Big Tech dominates will depend on: • the regulatory environment and compliance costs • the capacity of incumbents to monopolize the interface with customers
DISRUPTION  AHEAD
A FRAMEWORK THAT WORKS FOR ALL?
WHO’S MOST AFFECTED?
El 14 de septiembre de 2019 entraron en vigor en la Unión Europea la normativa de servicios de pago Payment Service Directive (PSD2) y las nuevas normas técnicas regulatorias (RTS) para autenticar las comunicaciones. Estos son los requerimientos y sus implicaciones.
C
SAVINGS INSTRUMENTS S
P
Alibaba (Alipay), Tencent /  China    Baidu /  China    Vodafone M-Pesa / East Africa, Egypt, India   Mercado Libre / Argentina, Brazil, Mexico Line, Rakuten / Japan  Google / Worldwide  Amazon, eBay (Paypal) / Worldwide Apple, Facebook, Microsoft / Worldwide
CREDIT C
S
GAINING GROUND
PAYMENTS P