On the other hand, technology breaks down the traditional barriers to entry in the credit and financial services markets, fostering competition: already today fintech firms are offering technology-intensive low-cost services. It is therefore hard to predict what will be the ultimate effect on the supply structure of financial services and banks’ profitability. I believe, however, that there are already two clear implications.
First, banks will have to invest heavily in technology to compete with one another and with new entrants: this is necessary for their very survival. Second, the structure of the financial systems will change radically in the next ten years with the entry of new non-bank operators.