Financial service sector beware! Facebook, Twitter may turn you redundant soon
Today I came across an amusing article by Arjun Parthasarthy, founder of Investors are Idiots.com. The article titled “Financial Services Industry will not exist in its current form in the next seven years” articulately argues how challenging it can become for the surviving financial services industry in India to remain viable in coming years.
The reasons are many but the leading can easily be traced out to be the social networking sites such as Facebook and Twitter which have already created a massive user base that is exceedingly penetrative and dynamic.
These platforms can easily swap the role of decades old stock exchanges. With further advances in technology a “seller” can easily meet the “buyer” on these platforms without needing any broker. Afterwards, the deal can be reached on paper offline. Ideal price discovery can be effortlessly achieved through this way.
Once the deal is struck, the settlement of shares can be effected through traditional channels. This entire process should not require any role of intermediaries or financial service providers or brokers as most of them don’t provide any such service which adds value to transaction done.
However, it still demands lots of technological advancement and credibility in this sphere.
Already Facebook has developed a service to transact money using it, and with e-commerce companies such as Amazon and Flipkart with their deep presence into small cities can offer reach to producers of financial products. To top it all, it won’t require any cost also.
Banks are already feeling the pinch as banking is slowly shifting to mobile in major parts of the world and private players looking to enter payment banks business, financial service providers may be the next to feel the heat.
So where is the prerequisite for physical presence and distributors?