Banking / Finance

Banks’ new competitors: Starbucks, Google and Alibaba

It took computer company Apple only five years to become America’s largest music retailer, and just seven to become the world’s largest. In 18 short months, search engine Google erased 85 percent of the market cap of the top GPS companies after launching its mobile maps app. Alibaba, China’s equivalent to Amazon, became a $16 billion lender in less than three years, and China’s largest seller of money market funds in only seven months.
Companies are venturing into other industries for growth with increasing regularity. In an Accenture survey released at Davos this year, 60 percent of executives said their company intends to make these types of moves over the next five years based on alliances, joint ventures and acquisitions.
This represents a major challenge to the banking sector where, in developed markets, growth and profitability are still at about half of pre-crisis levels. As banks recover from the downturn, non-banks are taking advantage by proceeding aggressively with digital innovations and capturing more and more of the banking value chain. Accenture estimates that competition from non-banks could erode one-third of traditional bank revenues by 2020.

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