How Financial Services Firms Can Adapt to a Customer-Centric World

The financial services industry has been able to survive on incremental change because the industry has existed in a walled garden, often protected by regulatory considerations and the scale of its key players. Potential competitors have been deterred by high barriers to entry, and consumers have been immobilized by high switching costs. But now those walls are collapsing, and the industry has become exposed to fast-moving market forces. A wave of entrepreneurial disruptors, as well as offerings from well-established “digital native” firms outside the banking industry such as Alibaba, Google, Lending Club, Simple and others, threaten traditional banks across the product spectrum from payment systems to wealth management. (Consider that in 2013 alone, Starbucks took in $4 billion in customer deposits through its Starbucks Card.)