Banks Lose Grip on Banking Future as Non-Entities Take Lead
The banking industry's future is being shaped by companies that are not banks. The assumption that banks would lead this transition has been challenged by the success of non-bank entities, according to Dharmesh Mistry, an editorial contributor for FinTech Futures.
Mistry notes that he used to think banks would build the next banking model due to their resources and infrastructure. However, his mind changed when he saw companies like Kraken, a crypto exchange, and Grab, a super-app in South-East Asia, assembling full-service financial platforms on decentralized finance (DeFi) infrastructure.
Kraken has acquired banking licences and charters, payments capability, traditional securities trading, and a balance sheet of regulated activity. It's essentially constructing a full-service financial platform without the legacy estate that banks carry.
Grab, on the other hand, started by moving people around cities but now moves their money, meals, insurance, and credit. The company didn't set out to be a bank; it aimed to own everyday journeys, which include finance. Payments come first, followed by lending and insurance, all embedded at the moment of need.
Mistry believes that these companies are converging on ownership of the customer journey, with regulated banking becoming a capability to acquire, partner for, or rent. He thinks leadership must be taken deliberately and expensively from competitors who are not waiting politely for banks to be ready.