5 2 BEYOND THE SUPERFICIAL DIGITALIZATION AS A DISINTERMEDIATING FORCE In many industries digitalization is a disruptive or disintermediating force The most obvious examples lie in tech start ups such as Airbnb for accommodation and Uber for taxis Of course the same process applies to global transaction banking meaning banks risk losing business to new market entrants offering innovative services In fact consumer appetite is on the side of the disruptors A poll carried out this year by Capgemini and the European Financial Management Association EFMA found that 83 of financial executives believed consumers were comfortable banking with internet and technology companies while only 68 believed consumers were comfortable dealing with banks True or not bank clients are certainly looking for a simpler banking experience expecting services to be available at any time anywhere and through any channel This means that online banking channels through websites and mobile internet are gaining traffic at the expense of physical brick and mortar outlets To this effect retail banks are already facing competition on banking services from major technology companies such as Apple and Google for instance with their payments offerings Apple Pay and GoogleWallet With respect to payments FX and data markets particularly barriers to entry have been reduced sufficiently to allow start up businesses to provide similar services to banks at highly competitive prices using digital platforms and the Internet to level the playing field DIGITALIZATION AS A DISINTERMEDIATING THREAT Because of digitalization two independent parties on opposite sides of the world no longer depend on their banking partners to bring them together And while at present this is mostly evident in the retail banking sector it is a trend rapidly expanding to include corporate banking services For instance in trade finance new cross bank bidding platforms are tilting the balance of power away from banks By placing banks into direct and immediate competition on individual contracts corporates are cutting costs and satisfying their trade finance requirements in an increasingly efficient manner squeezing banks margins as they go

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