Cryptocurrencies, such as Bitcoin, are a potential challenge to retail banks’ current business model, detailed in a KPMG report.
New smaller organisations could challenge the larger banks as they are quicker to respond to changing trends. KPMG’s ‘The changing world of money’ highlights competition from Paypal and Bitcoin as well as peer-to-peer lenders and smaller banks.
The report also suggests that the major banks have the money, long standing customer relationships and brand reach that will enable them to diversify quickly to any challengers.
Report author Warren Mead head of Alternative Banking, KPMG said:"With few or no legacy systems and greater responsiveness to customer service needs (and with few requirements to offer full service solutions to non-profitable customers), they can attract affluent, intelligent and profitable customers. These challengers are not looking to eat the whole meal. They will simply pick off the best bits."
He added that Bitcoin has its pitfalls as so few outlets accept it as a payment method and its price against national currencies can fluctuate by as much as 20% a day.