Online giants threat to retail banking model, CUBS conference hears
Amazon, Facebook and Google are the biggest threat to retail banks in the future as the online giants move to financial services, the chairman of Bank of Ireland has said.
Former chief executive of Paddy Power, Patrick Kennedy told UCC Cork University Business School annual conference that banking faced threats from financial technology, or fintech, firms such as banking service operator Revolut but also the online giants.
"Amazon, Facebook and Google are all looking at financial services in the US in particular, but also elsewhere. Personally, I think they are as big - if not bigger - a threat than the pure fintechs because they know how to retail, they know how to personalise and they know how to use data," Mr Kennedy said.
Bank of Ireland had to respond by "investing very heavily" into technology and its online offering, Mr Kennedy said.
We are replacing our whole processing system over a six-year period that will cost us €1.2bn because we have an old proprietorial system that needs to be replaced.
"Over six years, we will actually spend well over €2bn...Fintechs and the large tech firms are raising the expectations of consumers around what type of product and interface needs to be provided," he said.
Some 99% of transactions were now done remotely outside bank branches, Mr Kennedy said. However, the 1% of transactions such as mortgages and life cover inside the branches were "critically important" to the bank, he said.
Mr Kennedy said Brexit would be "chaotic in the short-term, and deeply negative for the UK, and not great for us also".
He was more optimistic about the medium-to-long term, he said.
Dean of Cork University Business School, Thia Hennessy told the 1,000 conference attendees that international accreditation for the school would propel it to the top 5% in the world in terms of international recognition.
The new school building, which formerly housed Brooks Haughton builders' yard in the city centre, is expected to open by September 2022, she said.
The new 220,000 sq ft building will bring 4,000 students and 200 students under a single umbrella, she said.
Ms Hennessy said balanced regional development was good for the entire country, and that there were enough big international and indigenous firms in Cork to allow students to forge an entire career in the city.
Other speakers at the conference in Cork Opera House, which was partnered by the Irish Examiner, included senior vice-president at the Federal Reserve Bank of Boston, Jim Cunha and co-founder of the I Wish programme, Caroline O'Driscoll.
