Will fintech force banks off the road?

I often hear about the fourth industrial revolution, the one in which digital, fintech and other disruptive innovations are creating a moment akin to when horse and carriage companies had to adjust to the launch of the motor car.

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We can see the signs of history repeating. There are new payment platforms, peer-to-peer and crowdfunding platforms, cyber currencies like Bitcoin and distributed ledgers like Blockchain for transactions.

"I could not find one reference for a successful horse and carriage company evolving into an ‘auto’ company."
Tareq Muhmood, CEO Korea & Managing Director Global Subsidiaries, ANZ

From my perspective, the changes the banking sector needs to embrace and drive is indeed akin to the transport sector in the transition from horse-drawn carriage to autos.

I recently read a number of articles on this transition from horse to car. In the late 1800s, there were 24 million horses in North America.  In 1890, New Yorkers took 297 horse-carriage rides per person annually. 

But consider what happened over a couple of decades:

• 1893 - First gas powered motor wagon (Massachusetts, Charles & Frank Duryea)

• 1896 - Henry Ford road-tests his first Quadricycle

• 1899 - First Auto Dealership opens in New York City

• 1900 - 4,000 cars supplied

• 1917 - the last horse drawn trolley left the streets of New York

The revolution was slow at first and horses remained the chief mode of personal transport for almost two decades. And then they weren’t.

Will fintech force banks off the road?


Why the plateau?  A number of factors, such as roads being predominantly dirt and not suited for cars (paved roads were many years away) and limited distribution networks for cars.  Also many of the early automobile models were primitive.

Culturally, there were also issues.  For example, laws were passed restricting how fast cars could travel. In some cases, regulation even required people with red flags to march along beside cars.

However, once the automobile did take off it did transform the look and layout of communities – the car allowed the growth of suburbs while the new interstate highway systems were built.

Some cities benefited, some others were diminished.

From this transition the winners were car makers and auto drillers. The losers were stable owners, feed producers, saddle makers, farriers.


There are many parallels here for banks. Similar to the dirt roads, much of the world’s financial infrastructure (and regulations) are not built for a digital age.

Many of the ‘serious’ innovations are still clunky are not ready for wide-use adoption.  Culturally, there remains a majority who fear the loss of cash or hard currency if cryptocurrencies take hold.

The part that gave me cold sweats was when I could not find one reference for a successful horse and carriage company evolving into an ‘auto’ company. Could this apply to the banks and other traditional financial service providers of today?

I think a clear lesson is banks have to act with some urgency if they are not to suffer the same fate as the horse and carriage companies of the past. 

This does not involve building a faster horse.  It involves a radical re-think of what people need, are looking for, and how it can be delivered. 

Accepting this reality and embracing digital is the first step in a journey that could take a decade (or two).

Tareq Muhmood is CEO Korea & Managing Director Global Subsidiaries, ANZ

Post -script: some companies did indeed make the transition. Hermes is today one of the world’s most profitable luxury goods companies. But it started in 1837 in the carriage trade, making harnesses and bridles. Hermes evolved with the market but has always maintained its reputation for quality, drawing on its deep history.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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