Former Barclays CEO says blockchain could destroy the core of banking

Rage Commentary : Antony Jenkins, former CEO of Barclays Bank, said that if banks do not change their inherent ideas, new technologies such as artificial intelligence and blockchain will completely shake the basic principles of banks and even challenge the entire industry. The role of banks in deposits and loans can already be replaced by other websites, and consumers are increasingly inclined to deposit and withdraw money with mobile phones. At the same time, other websites may charge lower interest rates. Bank leaders should pay more attention to simplifying banking processes, increasing bank profits, and regaining consumer trust. Only by innovating can they avoid being eliminated by new technologies.

Translation: Nicole

New technologies such as artificial intelligence and blockchain will completely shake up the fundamentals of banking and even challenge the entire industry, according to former Barclays CEO Antony Jenkins.

He believed that financial innovation could eliminate the need for maturity transformation—the process of depositing savings at fixed periods, such as checking accounts, and instantly accessing them, to fund long-term loans, such as mortgages.

This is the basic function of the banking industry, providing low interest rates to depositors and high interest rates to borrowers. He believes that in 10 to 20 years, this function of banks will no longer be needed - some investors have already used websites to match borrowers and depositors directly, avoiding banks.

Banks are introducing artificial intelligence and robots - which could cut a bank's workforce in half.

In a speech to the Institute of Chartered Accountants in the UK, its former chief executive Wales said banks would face huge challenges in the next decade.

Big threats facing banks include the emergence of online banking and the gradual disappearance of branch offices.

While they are not looking to eliminate banks - instead Jenkins believes the shift from retail banking to mobile phones is led by consumer demand - such change does come with challenges.

He believes that in the next decade, banks will close nearly half of their branches, and predicts that 20% to 50% of banking jobs will disappear due to technological advances.

He worries that banks will be hampered by aging computer systems in an effort to keep up with the latest technology.

Thousands of bank branches have closed in the past decade, and Jenkins hopes the next decade will be the same.

Jenkins, who ran Barclays from 2012 to 2015, was determined to overhaul the bank's culture following the Libor scandal.

Although his efforts cost him his job, he was replaced last year by new chairman John McFarlane, who was looking for someone more focused on streamlining the bank and increasing profits.

Jenkins went on to stress the need to change banking culture if banks are to end their days of being fined by regulators and regain the trust of consumers.

The CEO is crucial in executing such an initiative, he said in a recent private speech:

“Leaders play a critical role in changing cultural mindsets.”