Eighty percent of traditional financial services firms are expected to become irrelevant by 2030, with the onslaught of digital platforms and other non-traditional players, according to a report by Gartner.
The study said that of those surviving the blow of digital transformation, only power-law firms or those that own a digital platform, fintechs, and long-tail firms or service brokers will emerge as winners.
However, the study also stated that currently less than 15% of the traditional financial firms have the ability to convert themselves into or successfully spin off fintechs, while nearly 80% have the ability to become long-tail firms.
Only 5% of the traditional financial firms were said to have the ability to become power-law firms.
Gartner vice president David Furlonger said: “Digital transformation is largely a myth as institutional mindsets, processes and structures stand firm.
“Established financial services providers will have to move faster on digital business by building digital platforms or finding niche products and services to sell on others’ platforms.”
The latest study comes on the back of Gartner’s 2018 CEO survey, which found CEOs of traditional financial firms focusing on efficiency and productivity improvements instead of a transformation.
Gartner practice vice president Pete Redshaw said: “The future of the financial services industry is increasingly weightless, requiring few physical assets to establish or maintain a presence. That makes the industry especially vulnerable to disruption by digital competitors.”