Technology companies may end up being the top dogs of the banking and financial services industry, as they are in a good position to connect technology with customer experience, according to Insurance Australia Group CTO Michael Gindy.
At the Australian Information Industry Association (AIIA) Bank of the Future panel discussion in Sydney, he spoke on the advantage that new technology-centric players have in the financial services sector.
While banks have to deal with clunky legacy bank-end systems, new entrants can use cloud services to scale up rapidly and respond to customer needs faster.
"You can go subscribe to some [IT services] and go for it with no legacy — the hardest thing would be getting a banking or insurance licence," Gindy said.
The critical component to success in the financial services sector in the future is to connect technology with customer centricity, he said. This is something that big technology giants, such as Google, are capable of doing.
"When I worry about competition, I worry about the Googles and the PayPals because they have market share and they have the attention of the younger generation more than anything else," Gindy said. "It's a matter of when and how they choose to expand [banking services] to clients.
"It's not really about the IP they have built; it's about their market base and good timing."
Pocketbook founder Alvin Singh, who was on the panel as well, noted that the likes of Google measure success of their products through customer engagement, which would be an important component in the banks of the future.
"If you look at what's happening in the payments industry, the new players that are coming in are technology companies — it's like a side step into the banking industry," he said. "If I was a [bank] CEO, they are the companies I would be worried about, because they are newcomers and they're disrupting the banking industry."
This isn't the first time the financial services businesses have expressed concerns over technology companies encroaching on their territory. Banks acknowledge that it is crucial for them to partner up with technology innovators, but they are also cautious in doing so.
PayPal has been working hard to take on the big guns in the payments space, and has been actively pushing its cloud payment service into more physical retail outlets.