Why banks shouldn't be a monopoly
1. Banks cannot handle all the payment flows and this gave need for firms which provide other financial services to exist
Payment flows are becoming increasingly digital with the aim of driving efficiency. To catalyse innovations in this area, banks are partnering with fintech start-ups.
For example, in May 2017, Barclays launched its flagship innovation hub called “Rise” in Shoreditch that will welcome approximately 2,000 innovators each month to connect and share knowledge.
However, one must understand that banks have a sizeable IT architecture and are used to handle large amount of data that cannot be easily changed.
2. Even for the payment flows which actually go through banks, many times they lack personalised services because of their naturally large scale
A personalized customer experience is integral for online remittance and services.
Amazon, an American multinational technology company which focuses on e-commerce, cloud-computing, digital streaming, etc, is one of the Big Four tech companies along with Google, Apple and Facebook. Amazon create a curated experience for its customers, and this was one of the reasons why it's company became so successful.
Another example is the rise of financial service providers such as digital wallets, etc, which complement the services provided by banks but makes these services more personalised and convenient for end users.
3. Competition of service will drive down prices and transfer profits from the firm back to the consumers. Consumers can not only have greater variety of financial products to choose from, but also have them at lower transaction fees
With the entrance of more firms due to lower regulations, there will be greater competition, and this will lower the prices for consumers. Hence, migrants working overseas who wants to send money back no longer have to pay a high transaction fee to send money back to their home country. This will benefits individuals who are working overseas and are sending money home to pay their utility bills, kids' tuition fees, etc.