Garnet Capital Advisors Blog

Technology is taking over the way people do their banking these days.

From fintech companies, to virtual payment solutions, to cryptocurrencies, technology is making a huge impact on the world of banking.

Whether or not this is a good thing depends on who you talk to.

Technology certainly has made its mark on every realm of business, including banking. But while technological innovations have heightened the level of convenience for consumers, could technology also pose a potential threat to banks?

Technology is Taking on Many Faces in the World of Banking

Technology has affected the banking industry in many ways. Take fintech startups, for one. These bank alternatives have come up with faster, more convenient means of performing a variety of banking transactions, including loans, payments, and even wealth management.

Instead of going through the sometimes cumbersome and lengthy bank application process and then risking a loan denial, consumers now have other options to consider when it comes to borrowing, and these alternative, mostly online, lenders are providing them with it. Furthermore, the competition within this realm is becoming increasingly fierce by the day.

Blockchain technology - which is what underlines virtual currency like Bitcoin - is also being posited as somewhat of a threat to the banking industry. Bankers are concerned that this blockchain technology will reduce the role that banks play among consumers who are looking to exchange funds.

Opponents to bitcoin fear that cryptocurrency will minimize or even completely eliminate the use of physical money and credit cards, which will significantly reduce the need for banks.

Other virtual money exchange platforms - such as Apple Pay or Google Wallet - have also stepped forward to provide consumers with an alternative bank transaction. These platforms allow consumers to purchase goods and services online, and transfer funds in much the same way that they would via a traditional banking platform.

Payment technology, in general, is evolving at warp speed. Online payments, mobile payments, and contactless cards are all becoming increasingly popular among consumers who are looking for a faster, more convenient way to pay for their goods or services.


Consumers can easily make a payment or transfer funds from a simple click of a button on their mobile device.

Cloud technology has gained immensely in popularity over the recent months as well, with 89 percent of institutions running at least one application in the cloud. But banks remain hesitant to fully adopt cloud technology in fear of putting the most sensitive information out there. As such, only 1 percent of banks are currently running core processing in the cloud.

Banks Must Step Up to Keep Up

In order to keep up with all of these technologies, banks will need to dedicate a sizeable investment into ramping up their own technological innovations.

The best - and only - way for banks to deal with the advent of technology is to face this challenge head on. Whether it's through higher investment or even joint ventures with other technological entities, banks would be well-advised to make the effort to jump on the technological bandwagon.

It's the wave of the future - and the present - and its adoption and implementation is of paramount importance in order for banks to have a sound, long-term business model.

And many banks are waking up to this realization and are taking steps in the right direction to embrace technology, rather than rebuke it. For instance, financial institutions like CommunityAmerica Credit Union and Lead Bank have introduced drive-through teller ATMs where customers can still get face time with a live teller, but over a computer screen.

Customers can chat up with tellers and get the same level of one-on-one assistance, but the tellers are actually sitting in their corporate headquarters miles away.

This is one savvy way that banks like these are dealing with the societal changes of the age of mobile and online life, including banking - people just don't visit banks anymore. But with solutions such as these drive-through teller ATMs and depositing checks via smartphone cameras, banks and credit unions can counter this effect while still remaining on the competitive forefront in the banking industry.

Garnet Capital - Backing Banks While Technology Changes the Face of the Industry

It's impossible to ignore the fact that technology has - and will continue to have - a profound impact on the banking industry. Opponents to such an evolution may see technology as a major threat, while others may see it as an opportunity to improve the level of service that banks can provide to their client base.

One thing is for certain - technology is here to stay. And in order for banks to remain relevant, it's crucial for them to embrace these changes and incorporate systems that will aid in customer retention and strengthen their bottom line.

At Garnet Capital, we understand these changes and recognize how challenging they can be for financial institutions. Thanks to our extensive experience in providing valuation and loan portfolio guidance in the banking industry, we've come up with strategies to help banks strengthen their position in the world of finance, and remain competitive, despite the onslaught of technology.

Browse our informative white papers today to discover how Garnet Capital can be your partner in the face of the current technological revolution.