Banks have a target on their back. Image: Shutterstock
The Wall Street Journal reported today Ant Financial, an affiliate of Alibaba, is involved in a deal to buy U.S. money-transfer business MoneyGram. This news comes just two days after TechCrunch reported that Airbnb is in talks to acquire Tilt, a payments startup that helps groups of people collectively fund a purchase. Why are so many non-payments businesses pushing into payments today?
The answer is that banks haven’t kept up with the speed of today’s business. And if they continue to be slow to adapt, they’re going to get left in the dust.
Tech companies are the new global power players – building multi-billion dollar businesses that span the world, both in terms of customers and employees. They got there by moving fast and breaking things, not letting themselves be constrained by old models and ways of doing business.
And now, banks are getting in their way and have a target on their back.
Payments have been a huge pain point for these businesses in terms of cost, speed, and volume. Just consider how critical it is for Airbnb’s business that customers and hosts can quickly send and receive payments in any currency for its millions of listings. The current global payments infrastructure takes several days to process and confirm these kinds of cross-border payments, and is so costly per transaction that they’re further delayed because they have to combine all these “low value” payments into larger batches to be cost-effective.
It’s clear as day how the old way of banking is failing to meet the needs of these companies, and it’s nearly reaching a breaking point. If the system doesn’t adapt to the speed of modern business, these companies will find a way to go around it.
This should be a wake-up call for banks who want to stay relevant and compete in a world where corporate and individual customers increasingly have more options and they won’t just settle for the status quo.
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