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Fintechs, no threat to banks –McKinsey

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Fintechs, no threat to banks –McKinsey

Contrary to widespread opinion, the biggest threat for the banking sector is not fintechs, but non-banking companies such as Amazon and Alibaba, a recent report by McKinsey has stated. The study refers to these companies as “platform companies” and calls them the “new heavyweight competitor(s) in town,” for the banking sector.

 

Based on information gathered from McKinsey’s Panorama fintech database, which tracks more than 1,000 financial start-ups, the payments area is the fastest growing segment in which these “platform companies” are taking over. One example is Alibaba. The e-commerce giant is essentially a payments company, the report suggests.

 

Additionally, it provides services in B2B (Business-to-Business), ride-hailing, lending, and asset management. “Such companies are blurring traditional industry boundaries,” the report says. “With their superior customer experience, they can sell an ever-wider range of products to their loyal customers.

 

” Additionally, the report said that profits in the banking sector “remain elusive,” suggesting that for years the sector’s Return On Equity (ROE) has been stuck between 8per cent – 10per cent, with little change. It remains to be seen what 2017 holds.

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