Traditional banks will have the edge over their Internet-oriented rivals, despite the hype about digital mega-firms wiping out mainstream banks.

However, the Internet Companies such as Apple, Facebook and Google, would play a considerable role in shaping the banking industry of the future, according to a study by research and advisory firm Gartner.

“The evolution of the Internet continues to raise questions about the continued viability of brick and mortar establishments in retailing and financial services. Increasingly, Internet-oriented mega-firms are seen as the commercial enterprises of the future,” said Gartner fellow and Vice-President David Furlonger.

“However, as far as retail banking is concerned, it would be like trying to hammer a square peg into a round hole. This just does not fit”, he added.

The digital mega-firms are masters of data management and analytics and they define agility both from a technology and a business model point of view. They are extremely adept at extending their value chain analysis beyond the core offering, with an eye to identifying new opportunities for business and highlighting specific customer needs that they might address.

Security remains paramount for all banking applications, and while for many of these new entrants, security and privacy of customer data is important, it is not at the level of priority that would be needed to support a banking proposition.

“For many existing financial services’ institution, mapping out the path to the future is proving extremely difficult and challenging. Traditional models no longer apply to many of their customers or markets. They have a series of questions to address - do they simply copy the new opposition, do they try and exert influence over the broader market, do they look for help and partners, do they need to fundamentally restructure?” said Furlonger.

rajesh.kurup@thehindu.co.in

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