LONDON–The former CEO of one of the world’s largest banks painted a somewhat bleak future for big banks.
In remarks here, Anthony Jenkins, who previously led Barclays, said that in the future the “incumbent (big banks) risk becoming merely capital-providing utilities that operate in a highly regulated, less profitable environment, a situation unlikely to be tolerated by shareholders."
Jenkins predicted that a series of “Uber-style disruptions” could reduce the employee count at
traditional big banks by as much as half while profitability in some areas could collapse by over 60%.
"In my view only a few (incumbent banks) will have the courage and decisiveness to win in this new field,” he said.
The culprit? According to Jenkins, financial technology, better known as fintech and companies such as Lending Club, Prosper and Square.
Jenkins, who was let go by Barclays in mid-2015, said his visits with Silicon Valley companies indicate there will be “massive pressure on incumbent banks, which will struggle to implement new technologies at the same pace as their new rivals.”
The only way to get costs under control, he posited, will be significant automation of business, which will mean big reductions in the number of workers and branches.