Why do banks need new technology?
Banks mainly use technology for the following reasons: security, convenience and competitiveness. New concepts such as blockchain enable banks to implement more secure solutions. For this reason, the financial sector has the highest share in blockchain technology worldwide. Conversely, banks are trying to reach as wide of a client base as possible. As a growing share of the population embraces mobile technologies, trends like digital banking become more critical for established banks to adopt.
Consequences of stagnation
Financial technology, or fintech, is becoming a disrupting factor in a variety of ways. The slower banks are to adapt to this changing marketplace, the faster non-bank firms will arise to fill the gaps left by traditional financial service providers. Phenomena such as peer to peer lending are already displacing the traditional role of banks. As such, financial institutions are investing in the technologies that make such lending possible, hoping that early adoption of these new technologies will give a first-mover advantage.