If history teaches us one thing, it’s that nothing lasts forever. From the flares of our forefathers to “mobile” phones the size of shoeboxes, it’s hard to argue against the claim that change is the only constant. Even institutions such as Coca-Cola and the noble game of golf are reported to be in decline in 2015; underscoring the fact that the tastes and tendencies of each generation will inevitably differ from the accepted norms of the past.
According to one recent study, no historic establishment is more likely to experience dramatic disruption in the near future than banking. Polling over 10,000 people born between 1981-2000, The Millennial Disruption Index unearthed some staggering statistics about how the largest generation in American history views banks. For starters, 71% of respondents said they would rather pay a visit to the dentist than listen to what their bank has to say.
Moreover, all four of the leading banks in the U.S. took their place among the top 10 brands loved least by Millennials. So it’s hardly surprising that 70% went on to state a belief that the way we pay for things in five years will be totally different, and 73% said they would be more excited about a new offering in financial services from Google, Amazon, Apple, PayPal, or Square than their own nationwide bank.
The belief that banking is already in the process of being irreversibly altered is widespread, and just last month Traxpay’s CEO, John Bruggeman, offered his own insights into some likely outcomes of that disruption in his keynote speech at MoneyConf in Belfast.
So why are traditional banking methods destined to become a fading fashion, and what will the future of financial services look like?
As outlined above, one major factor driving disruption in banking is unhappy customers. With millions of Millennials now at an age and stage where using financial services is a part of everyday life, the stark contrast between the convenience they take for granted in our ultra-connected age and the often-convoluted methodologies they experience in banking doesn’t sit well.
And as with so many archaic irritations, today’s technology means we don’t have to settle for the status quo. Just as the availability and unpredictable pricing of taxis gave birth to Uber, and the restrictions of the existing hotel industry spawned Airbnb, so the shortcomings of banks have prompted a tech rebellion focused on overhauling the financial services on offer to individuals and businesses alike. As one recent article neatly put it, “Software is eating banking”.
For businesses specifically, using software that helps them to manage financial affairs traditionally linked to banks is an essential source of efficiency. To this end, several Software-as-a-Service (SaaS) providers have created integrated solutions that empower companies to conduct key tasks in areas such as accounting, inventory management, and payroll in a more “one stop shop” manner.
But the work has only begun. While businesses are unquestionably benefitting from today’s SaaS tools, they remain bound by the restrictions of banks in other areas. And as we’ve highlighted in the past, no area is more hampered by traditional banking services than B2B transactions—which remain a costly, time-consuming process disconnected from even the best existing workflows.
Thankfully, like that hairstyle we sported to senior prom or dance craze we once felt compelled to replicate, things change. As SaaS providers continue to breach territory formerly occupied by banks, the extent of the tools on offer will rewrite the future of financial services forever. And not a moment too soon.