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Do We Need Challenger Banks? Do We Need Banks?
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Do We Need Challenger Banks? Do We Need Banks?

David G.W. Birch
Forbes, 2021
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Editorial Rating

7

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  • Innovative
  • Eye Opening
  • Bold

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The past will not be prologue in the banking sector, according to this thought-provoking essay by columnist David G.W. Birch. Banks have long had a monopoly on savings, lending and payments, he writes, yet the logic of offering these services all under one roof is fading. Fintech’s ability to harness and parse large quantities of credit data presents new avenues for banks and nonbanks. Financial professionals will find Birch’s take on the future of the banking industry sobering but insightful.

Summary

Traditional banks have long controlled consumer payment, savings and credit products.

Checking and savings accounts, debit cards, and loans have been the stock-in-trade of banks for years. Banks’ economic and social role has typically been to make transfers – by extending credit, by investing in and underwriting businesses, and by executing payments. In doing so, financial institutions also gather information with which to make lending decisions and manage risk. 

Both traditional and “challenger” banks – those providers that offer mobile applications of financial...

About the Author

David G.W. Birch is an adviser and writer who specializes in digital financial services.

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