Advances in technology will allow savers and investors to bypass financial services providers and, in the process, end the monopoly of the incumbent banks.
That’s the view of Andrew Haldane from the Bank of England, who told The Times that the dominant position of banks comes from their role as transactional facilitators, but the ubiquity of consumer technology and integrated communication means that these institutions may become largely irrelevant.
Although his claims may seem outlandish, Haldane compares the situation with two other industries which have been utterly transformed by technology. “Where music and publishing have led, finance could follow. The banking middle men may in time become the surplus links in the chain.”
Citing the rise of start-ups such as San Francisco-based Kiva, which allows peer-to-peer banking, Haldane suggests that businesses able to harness IT could grow to become defining forces for their industry. “At present, these companies are tiny. But so, a decade and a half ago, was Google.”
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