A new report by Citi titled 'Digital Disruption', predicts that US and European banks will shed 1.7m jobs by 2025. The report argues that banks will continue to become more digitally focused. Banks will not be replaced, but their branches will be.
Despite all of the investment and continuous speculation about banks facing extinction, only about 1% of North American consumer banking revenue has migrated to new digital models. Although FinTech companies have the advantage of new innovation, 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. Given the growth in FinTech investment, this isn't likely to continue for long. In China, Internet giants have moved into financial services and gained considerable market share in e-commerce and third-party payments. These new entrants were faster than the banks to offer convenient, reliable, fast and cost-efficient alternatives to traditional bank payments.