Many global investors are focused on new research from the International Monetary Fund or IMF, a piece that is telling banks that they must evolve or risk being “left behind” according to an article sourced on CNBC attributed to Elizabeth Schulze. The IMF went on to say that banks should prepare themselves for disruption from tech firms, the usual tech giants, and fintech start-ups. However, this comes at a time when regulators have said that they are skeptical of Facebook and that new start-up called Libra. European regulators have shown that they are skeptical and more recently US and even Donald Trump have stepped in with views.
IMF authors Tobias Adrian and Tommaso Mancini-Griffoli said that the two most common forms of money today are cash and bank deposits but will face competition on the future. The recent announcement by Facebook regarding Libra has been met with skepticism from many officials around the world with Europeans leading the way. Federal Reserve Chairman Jerome Powell said Libra raises “serious concerns” around privacy, money laundering and consumer protection and of course financial stability. The piece written by the IMF authors that is getting so much attention is titled “The Rise of Digital Money.”
Our Views: Clearly banks around the world have been struggling since the 2008 financial crisis, with obvious result being the haves and have nots rising to the surface. Some of the giant German banks that were powerful in 2000, one of our partners worked at one of these banks, are not falling to pieces. Others such as Goldman Sachs started talking about being more of a tech company years ago, with the Japanese, Chinese and US giants spending between $500 million and $1 billion a year, every year, on tech hardware and software upgrades each year. Those that have invested these billions of dollars will, according to the IMF, be the ones that survive.