Will mobile payments completely replace the traditional banking sector?

In the past 25 years, we have experienced the digital revolution. In this revolution, we have gained another truth: the inability to harvest users means death.

During this time, the recording industry was busy suing pirated companies so much that it was not able to expand its business into the digital world; traditional newspapers were a frequent fixture in the Internet, and DVD-video stores had to contend with YouTube.

In these cases, the losers are those that cling to traditional business models, and those that actively respond and adapt themselves to the digital age benefit from this era. By adjusting their strategy, they reduce operating costs, expand the size of their businesses, and provide consumers with a better experience.

Now we are entering a new era, that is, the mobile internet era, more and more people use mobile devices to access the Internet, and abandoned the bulky PC. In this era, an industry has the biggest challenge, that is, personal banking and payment industry. The popularity of mobile devices has changed the experience of using personal banking and paying products. Now when we walk into Starbucks, we can easily use the mobile phone to pay. Nowadays, people are becoming more and more accustomed to living out without cash, now the cash, has become the former pager, gradually forgotten by people. All we need now is a cell phone, a bank account, and we can go shopping.

But will mobile payments completely replace the traditional banking sector?

Although the banking industry is growing at a slow pace, they will not die in a short time. The reason is that the traditional banking industry has a special relationship with our life and business. For example: Bitcoin will not be able to completely replace the dollar, sterling, euros, yen and other real currencies. However, please pay attention to my wording, I said that the traditional banking industry will not be "in a short time" extinction. Even in this deeply rooted industry, some small businesses are still constantly innovating, as long as they think about it, you will feel more than words.

If you look closely at these startups in the financial software industry, you will find that these small businesses are driving the whole industry's innovation process and are having an important impact on the direction of the industry. Dwolla, for example, is challenging Visa, MasterCard and discover to become an important payment network. Simple, Akimbo and Moven companies will become the most mainstream financial enterprises in the future. Betterment and Wwalthfront are also changing the way we invest online, and they have built a platform on which to maximise their profits. Not to mention countless large and small enterprises have accepted the fact that mobile payments.

Perhaps the success of these small businesses depends on this era, the network age. They rely on the power of the network to innovate and publicize, and ultimately to achieve expansion. But the biggest secret of their success, in my opinion, is a belief in a "fearless failure".

First, we need to understand the relationship between financial software start-ups and traditional banks. There is actually a symbiotic relationship between the two.

Dwolla is not the one who is in charge of transferring your money, but is actually a credit agency in Iowa. Simple, Moven and akimbo are not the parties responsible for storing the user's money, the actual storage of the user's property is actually a specialized government banking institution. There is, therefore, a symbiotic relationship between startups and traditional banks.

So why can't a traditional bank do the job on its own, instead handing it over to start-ups?

That is because traditional banks cannot afford to take such risks. As we all know, traditional banks need to have a high degree of credibility, and if they make a small mistake, they can cause users to lose billions of dollars of property, and banks are likely to announce their demise within today. As a result, they have to give these services to start-ups to deal with.

Of course, such a symbiotic relationship does not mean that the two can cooperate in an intimate way. A senior manager at a bank told me on the phone that he didn't think the start-ups were banking. The traditional bankers, while working with these start-ups, have to keep their wits about them in case the start-ups are at risk of coming home, trying to crush the traditional banks and replace them.

In this case, will financial software start-ups have a chance to grow? Of course, while bankers say that financial software start-ups are not banking, they have been buying them. And how does it explain how some investors with a bank background are constantly investing in these start-ups?

Market demand for these start-ups will not stop. Consumers and companies have already embraced these emerging services, and bankers are already aware that what they can do now is just to maintain the symbiotic relationship and become partners with these start-ups.