Community Banks see Big Tech as Top Threat to Business Models, Report Finds
According to a survey by Promontory International Network, about 26 percent of community bankers consider big technology companies like Google and Amazon to be the main threat to their business. Tech giants rated more than double the 11 percent of community bankers that see big banks as their largest competitor. The survey respondents were mostly executives from banks with less than $1 billion of equity.
Tech giants have increasingly found their way into financial services, like with Google’s partnership with Citigroup for checking accounts and Apple’s collaboration with Goldman Sachs for credit cards. Though these tech companies pose a threat to community banks, there are still some roadblocks according to Paul Weinstein, a senior Promontory advisor. Consumers have generally been skeptical and cautious to store their finances with tech companies, and policymakers have specifically shown apprehension towards Facebook’s cryptocurrency plans.
Because of skepticism, tech moguls will likely face opposition the deeper they get into financial services. “Given the regulatory challenges, [winning market share from smaller banks] will not be something easily accomplished right away,” Weinstein told American Banker.
Community banks feel the need to step up to compete with the threat of not only tech companies, but exclusive online banks as well. Apps like Venmo have led to a decrease in ATM usage and an increase in peer-to-peer money transfers. Over half of the banks surveyed said they already offer a similar service, and another 39 percent are considering it.