Banks Seen as Ready to Handle Fintech Upstarts

A new survey says Goldman Sachs and JPMorgan Chase will be the main beneficiaries of innovations such as the blockchain.
Matthew HellerDecember 28, 2015

U.S. banks will suffer only limited disruption from financial industry startups, with Goldman Sachs and JPMorgan Chase expected to be the main beneficiaries of technological change, according to a new survey.

Eighty-five percent of the 150 executives and investors polled by Autonomous Research predicted selected disruption or a mix of winners and losers, while only 14% thought banks face a significant, Uber-type threat.

“Technology doesn’t move as fast as people think,” Brian Foran, a partner at Autonomous Research, told Bloomberg. “The pace of change will be slow enough that the traditional players can co-opt, whether it’s through building, buying or partnering, and acquire the technology disruption.”

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Many banks are preparing to offer more technology-driven services so upstarts do not steal away customers. Bank of America CEO Brian Moynihan warned last month that if banks bungle the tech transition, “it may allow part of our industry to be forever taken away from us.”

Blockchain, the software ledger that can speed up and simplify how financial transactions are recorded, has the potential to be among the most influential of the new technologies, according to the survey.

Foran said JPMorgan and Goldman have the best track record of implementing technology and will be able to successfully learn from new entrants in payments, blockchain and automated investing. Other big winners could be Visa and MasterCard as mobile payments become more commonplace and blockchain technology lowers costs in many institutional businesses.

American Express, the biggest credit-card issuer by purchases, was picked by survey respondents as one of the biggest losers from technological changes.

The company has “a higher-priced interchange model,” Foran said, using a term for the fees charged to facilitate credit-card purchases. “If financial technology will make transactions have less friction and lower costs over time, the ones with the highest prices are the most vulnerable.”

Western Union and MoneyGram International could also be vulnerable to coming payment systems that are seeking a share of global money transfers, the survey found.