Last year I penned "Who Are The Three Biggest Data Companies In the World? 1) Google 2) the Fed 3) JP Morgan/ECB [5]" in an attempt to illustrate what many C-suite professionals seem to be missing. That is banks are essentially in direct competition with GAFA (Google, Apple, Facebook and Amazon - the pre-eminent data companies of our time). Banks are only just now starting to catch on to this, but the problem is they are catching on in the wrong way... again. It appears as if banks are concerned that GAFA will gain control of the user by sitting in between the heavily regulated commidity service (banking) and the user/user interface/user experience. Apple Pay is a very strong example of such. Now, don't get me wrong - that's a very valid concern. It's just that it's a concern born out of a gross misunderstanding of how the new "money" technologies work and what they are capable of. In all due respect to banking management, they are not the only one's who may not fully grasp this concept. I've notice many very smart investors and regulators may be missing the point as well. I glean this as I go on my mini-roadshow to raise capital for Veritaseum [6]. The problem for the bankers is that they are the one's who will be affected the most. Investors may miss out on the next big thing. Regulators may pass inefficient regulation that may need to be re-written. Bankers face relegation to base utility companies with capped profits and margins, literally shielded from both the public view and mindshare... and that's the optimistic scenario! The probable scenario is that most bank functions will be subsumed into software and banks go the way of the classified ad (which was software-ified into Craigslist, eBay and Amazon).
Banks have been protected from competition for decades, essentially since the Great Depression. This protection may have shielded profit margins, but it is also stagnated innovation to the point where the banking industry is the oldest dinosaur of the era. The ATM from the late 1960s was the last material innovation that actually had a positive effect on the consumer. Practically everything else was financial engineering designed to pad margins. This remained true even through the Internet boom era where practically every other industry in the world witnessed a destructively creative boom in efficiency that caused slower dinosaurs to become extinct, replaced by faster and more nimble followers of the digital Apex Predator. All except the financial services industry. Why? Most likely because of regulatory protections. Now that we have "the internet of money" (that's blockchain technology for those who didn't know), it's time for the financial industry to face that creatively destructive cleansing of the inefficient.
GAFA, or young nimble startups such as Veritseum, see that the you can not only stand in as middleman/rent seeker/gatekeeper to the banks (this is the business model of most banks, which is why this is likely the first conclusion they jump to when they have a concern about GAFA competition), they can literally remove the middleman - period! Through Blockchain technology, many (if not most) banking functions and services can be facilitated on a peer-to-peer basis, without the participation of a bank at all. This means that banks' concerns of being relegated to a commoditized, highly regulated white-label service provider are not nearly paranoid enough. We're talking, at least in eyes of Veritaseum management - full blown, absolute disintermediation. The absolute removal of the rent seeker from the capital and money services equations - reference The Revolution Will Not Be Televised. It Will Not Be Decentralized, But It Will Be Distributed. [7]
You see, this wasn't possible 20, or even 10 years ago. Not only is possible now, it's being done on a trial basis. The reason is because the blockchain allows what is known as zero (or low) trust transactions. By minimizing or eliminating the trust necessary to conduct a transaction, you significantly increase the efficiency of said transaction. More importantly, you eliminate the need of 3rd party "trusted" intermediaries. The biggest of which are the banks in today's global banking system. Capital is a commodity. Banks don't truly supply or produce capital, they gather it from other entities and simply control it. If the capital of other individual entities are allowed to flow freely among themselves, there literally is no longer a needed function for banks. Does this sound apocalyptic or far fetched? Download the Veritaseum wallet [8]and start trading the value of over 45k tickers in all asset classes, with leverage and without counterparty risk directly with others and solely through software and the blockchain-fortified cloud. As you do this, take note that you didn't come into contact with a single bank, broker or exchange. It's as far fetched as your next mouse click!