Jan 19, 2017 10:09 AM EST

Banks To Go Digital

The banking industry will become more digitized as it faces challenges being posed by technology.

"What will the banking system look like in five years' time? There will be fewer players. Consolidation will be done by those who have mastered technology. If you don't master technology you won't survive," says the chairman of Spain's BBVA.

This is the future of finance as affected by technology and discussed in an article published by Forbes. According to the news website, Citigroup has predicted that 1.7 million jobs will be lost when banks go digital in the next ten years.

What will this digitization entail? The industry will see the entrance and application of artificial intelligence, voice recognition, as well as cloud computing in order to provide financial services and immediate financial decisions, writes Forbes.

According to the chief executive of ING, Ralph Hamers, the computing power will allow banks make more applicable default rate predictions. This will, in turn, make possible fast lending decisions and the pre-scoring of customers.

Not only will the sector be more efficient, but it will also be more economical. Oliver Wyman's study revealed that 15 percentage points can be saved on costs as a proportion of revenues. All these automations will eventually leave banks as "component suppliers" who take care of loans and savings accounts which are highly regulated.

Technology focused groups will, in turn, says Wyman, control the valuable side of the relationships with customers, serving as "demand aggregators" and "platform providers." Already, the number of robo-advisers on automated financial advice websites is on the rise.

At present, European banks are in hot water with a reported average return on equity at single digits. ING has also announced that it will let go of 7,000 employees out of its 54,000 staff members.

To read more about other industries that are at risk of disappearing, click here.

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