The Economist: FinTech won’t kill the banks but it might kill their profitability

The Economist says that “If fintech doesn't kill banks, it might instead sap the sector's profitability. A future as a sort of financial utility—ubiquitous but heavily regulated, unglamorous and marginally profitable—is hardly a gratifying outcome for banks. Around half of all (retail) bank customers are unprofitable already. If ever more of them flock to fintech startups for ancillary services such as foreign exchange, that proportion will increase inexorably. One solution may be for charges on current accounts to rise, for example with monthly charges, to compensate for lost cross-subsidies. Another would be for banks to slash costs, and many are shuttering large numbers of pricey branches. A last resort might be for banks to buy the fintech insurgents. A billion dollars sounds like a lot, but it is spare change for a bank CEO wondering if the newcomers will render his firm obsolete.” Read the full article here: (VIEW LINK)