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Modernisation , Replacement of Incumbents, Fragmentation of Financial Services Top Basel Committee Disruptive FinTech Scenarios


The Basel Committee on Banking Supervision has outlined five potential scenarios describing the potential impact of fintech on banks.

The Committee paper how technology-driven innovation in financial services may affect the banking industry and the activities of supervisors in the near to medium term.

Five stylised scenarios were identified as part of an industry-wide analysis that drew on surveys with bank supervisory authorities:

  1. The better bank: modernisation and digitisation of incumbent players
  2. The new bank: replacement of incumbents by challenger banks
  3. The distributed bank: fragmentation of financial services among specialised fintech firms and incumbent banks
  4. The relegated bank: incumbent banks become commoditised service providers and customer relationships are owned by new intermediaries
  5. The disintermediated bank: banks have become irrelevant as customers interact directly with individual financial service providers

States the Committee: “Current observations suggest that, although the banking industry has undergone multiple innovations in the past, the rapid adoption of enabling technologies and emergence of new business models pose various opportunities and risks to incumbent banks in almost all the banking industry scenarios considered.”