Bank of America or Apple Bank: Is the banking sector ripe for disruption?

The economic crisis has made banks much more hesitant when it came to lending out money. The popularity of banks has also been dropping with people holding the banks partly responsible for causing this crisis. Customers no longer feel to have a relationship with their bank, but feel treated like a number. An important question that arises then is: Are banks maybe unwillingly preparing their sector for a disruptive takeover?

This process has already been set in motion. Crowdfunding as an alternative to banks has been growing impressively. Global crowdfunding campaigns are expected to rise to $35 billion in 2015. Although the concept of crowdfunding can hardly be called new – the pedestal of the Statue of Liberty was already funded by raising money from over 100,000 funders – it has become much easier to implement with the internet providing a platform to find willing funders from over the whole world. And it’s not just crowdfunding. McKinsey & Co, a leading management consulting firm, released a report last month warning that increasing profits in the banking sector has already attracted the attention of more than 12,000 fintech startups, who offer cheaper services and are eating the margins of the traditional banks.

These are just the smaller fintech startups who are threatening the market. What if one of the bigger tech companies like Google or Apple decided to enter the market? If they decided to leverage their large resources, market platform and user base they could draw a large share of the market. This scenario might be even closer than most expect. Both companies have already set their first steps in the financial market. Google introduced Google Wallet in 2011 which aimed to replace your wallet with a virtual one, containing all your payment and loyalty cards, for mobile payment in stores. Apple introduced Apple Pay last year where you could pay with your iPhone instores. Although adoption is still slow Apple Pay already succeeded in capturing 1 percent of all retail transactions in the U.S. one year after the launch.

Research by KPMG among young bankers in the Netherlands suggests that these companies will have taken a large share of the Dutch market by 2025. Young bankers see their bank lacking in knowledge of new technologies and unable to provide the personalized service and added value to their services that customers expect.

What these tech companies have in common is that they use innovative technology to provide services to the customer they didn’t even know they wanted. They have a more direct communication with their customers in a world where people have the feeling that banks don’t have the interests of their customers at heart anymore, but care more for their profits. And undeniably these tech companies have the coolness factor working in their favor. A company like Apple already has a popular brand giving any products by the company an attractiveness traditional banks cannot compete with.

McKinsey & Co concluded in their report that banks are facing a choice. Either battle these newcomers in the market or join them. The traditional banks have little time left to to make a choice, before it’s too late.

JH Aben – 171724


KPMG, Next Generation Banking Survey (2015) Accessed: October 6, 2015 from

Global Crowdfunding Market To Reach $34.4B In 2015, Predicts Massolution’s 2015CF Industry Report (2015), Accessed: October 8, 2015 from

Banks Face Fight-or-Join Decision With Tech Firms, McKinsey Says (September 30 2015), Accessed: October 6, 2015 from

Apple Pay Faces Tough Crowd in First Year (October 6 2015) Accessed: October 7, 2015 from


One response to “Bank of America or Apple Bank: Is the banking sector ripe for disruption?”

  1. blouwman says :

    Hi JH Aben,

    Personally I believe that true disruption will not come from major tech firms like Apple or Google. Although not to the same degree, they are already suffering from the same issue that traditional banks are suffering from: IT legacy.

    However, there might be another thing even more relevant. With FinTech startups, what you see is that they look at a banks product/customer matrix. Then they pick the niche in which they think technology can improve efficiency, and thus provide a similar service at a fraction of the price. Though this is profitable, current profit margins of these major tech firms are to big to compete in this current ‘penny on the dollar’-business.

    Major disruption will come from those companies able to reconnect al these niche-actors and construct ‘the new bank’, which might be done by e.g. Google Ventures. A bank that is not tight to multi-billion legacy systems and without a CEO that is to afraid to think of these as ‘sunk costs’. A bank that is able to be flexible, and provide excellent customer service, at a fraction of current expenses.


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