Former CEO of Barclays, the UK’s second biggest bank in assets has, in a recent speech, opined that banks will have to face “extraordinary changes” in the upcoming decades, in quotes attributed to the Telegraph.

Speaking at the Institute of Chartered Accountants in England and Wales, Jenkins touched upon banks’ reliance on maturity transformation – a core component of retail banking, critical to its very existence.

Maturity transformation is the practice where banks in the retail banking sector take short-term deposits such as basic savings accounts, current accounts, short-term deposits etc., to fund long-term loans such as mortgages. Fundamentally, retail banks profit and thrive from charging a high interest rate to borrowers while offering lower interest rates to savers. That gap, is critical to a revenue stream of a retail bank.

In a decade or two from now, Jenkins sees individuals on both sides of the equation interacting in such a way that a bank’s presence would not be required. Investment and lending platforms on websites where borrowers and savers interact directly, is touted as one reason, with p2p principles.

Jenkins pointed to the “imminent threats” of the rise of online banking and the demise of physical bank branches, facing the banking industry. In the current economic climate, banks are finding it harder to boost their revenues, Jenkins said. To hike their bottom lines and meet tightening capital regulatory requirements, banks are bound to cut costs, the former Barclays’ CEO revealed. One of the key areas of cutting costs is through the implementation of automation, which would cut down on the banking industry’s workforce.

Jenkins has previously spoken about an “Uber-like” disruption of the banking industry from the Fintech sector. He predicted that the number of branches and people employed in the financial services sector could decline as much as 50% over the next decade.

“Even in a less harsh scenario, I expect a decline of at least 20%,” Jenkins boldly proclaimed.

Jenkins is also setting out to launch his own Fintech venture, although details surrounding the startup remain scarce.

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