Banking is going through a period of disruption and change that is unprecedented in modern times. As traditional banks are being disrupted by start-ups and new technologies, the internet is changing the way that people think about the sector. Blockchain has provided a new model for financial transactions, and is taking market share from all kinds of other financial assets. Will banks be able to modernize in time to maintain relevance into the 21st century, or will start-up banks and other fintech firms take over and push traditional banks into irrelevancy?
Banking has been in a state of disruption and change for a while. New technologies have caused a great deal of change. The internet, for it part, has given consumers the ability to circumvent banks and do their own transactions. This has led to a decline in the number of bank branches, but has also given consumers the ability to use their bank accounts to handle their money more efficiently. Mobile banking allows consumers to handle large transactions and make deposits and withdrawals from a mobile device.
More recently, blockchain is leading to another wave of change in the banking sector. The blockchain has been compared to the internet in its potential to disrupt industries and change the way that people do business. Bitcoin, for example, is the hottest commodity at the moment and banks have struggled to understand it and to offer products to customers. Blockchain-based smart contracts are another game-changing technology that we have only seen the beginning of. Smart contracts are digital contracts that allow people to transact business in a way that is faster and more secure. Smart contracts can be used to streamline many banking transactions, and can cut costs and increase security at the same time.
There are numerous other reasons why blockchain is a disruptive technology in the banking sector. Blockchain helps to cut down on fraud, and makes it easier to verify the identity of people and organizations that are doing business. Blockchain is also much more transparent than traditional banking, which allows people to keep track of their money in a way that was impossible before. On the other hand, transactions conducted in bitcoin are irreversible and traditional banks have less oversight and power over them. These are just some of the ways that blockchain is changing the banking sector.
Traditional banks have not been ignoring these changes. Brick-and-mortar banks have undergone a number of changes in recent years. One of the most obvious is in the number of branches that banks have. While there were more than 200,000 bank branches in the United States in 1998, the number of branches has been cut in half. Most of those branches have been closed because of the internet, and many banks are closing branches because of the rise of mobile banking. In essence, there is less and less reason for bank branches to exist now that most business is conducted online.
As traditional banks are changing, new banks are emerging as well. Many banking start-ups are looking for new ways to take market share. Some new banks are focusing on new technologies, and are looking at blockchain and other technologies to help them take market share. Other new banks are focusing on niche markets, or are trying to offer the same services as traditional banks but with lower fees and higher interest rates. Many of these new banks are using blockchain technology to help with their financial transactions.
As new banks emerge, traditional banks are being forced to change in ways that they normally would not. Some traditional banks are using new technologies to help them improve their services. Other traditional banks are using blockchain technology to move into brand new markets. Traditional banks are also being forced to improve their customer service, which is a huge change for a bank that has traditionally been impersonal.
The changes that are taking place in the banking sector are vast, and are only just beginning. It is very likely that we will see continued improvements in customer service, better interest rates and lower fees, as banking becomes democratized and the sector opens up to more and more competition. It is an exciting sector to watch.