It wasn’t a great few days Barclays (LSE: BARC), with a retail arm of a company suffering from widely published technical problems on a enormous scale. Despite this, considering that Barclays shares have increased by 98% over the past year, at least his investors laugh … up to the bank.

I have no action in Barclays, and even at any British bank. This is due to the fact that one risk I see is a needy economy leading to higher rates of non -performance for a loan, injuring.

But I am more and more worried about another, long -term risk, I think the latest distinction in Barclays’s defeat.

Voluntarily devoting a competitive advantage

If the application drops, having a physical branch network can really enter. Maybe not. An offline application or one that does not work properly, may be symptomatic technical problems that also affect departments and cash machines.

However, sometimes having a branch network can be very helpful for customers. This is one competitive disadvantage, which I see at purely digital financial service providers.

Meanwhile, banks with branch networks are increasingly perceiving them as a competitive defect due to the costs associated with it. Last month, Barclays closed troops in cities from Barnard Castle (Durham Ferry) to Mynach (Wales). British banks have radically reduced their physical trace over the past decade and it looks like a continuation.

Can banks fight Pureplay’s digital rivals?

The problem is that I am not convinced that older banks have a suitable set of skills or motivation to compete in the regulations of digital platforms, as well as more targeted rivals. HSBC Has recently announced plans for closing international payments ZingAlthough he started only last year.

Is this because the international payment market is unattractive? I don’t think so. Wise It has market capitalization worth 11.3 billion pounds, and in the last last quarter it was used by over 9 million customers.

It continues massive Growth possibilities for digital companies such as Wise and Revolut. They can not only charge customers for cash transfers, but there are also possibilities of profit in the difference (“spreading”) between exchange rates used in some transactions and deposits of loan customers at higher percentage rates than they pay.

In other words, such companies could eat the lunch of classic banks. In the long run it can be very bad news for revenues, especially profitability in well -established banks.

What I am looking for during the assessment of banking shares

Banks have great competitive benefits, including robust brands, enormous customer bases and a physical presence that can offer clients comfort and assurance.

Metro Bank And construction societies, such as in the whole country, focus on these strengths, although with mixed results. Meanwhile, FTSE 100 banks, including Barclays, Nestwest AND Lloyds He goes in a different direction.

HSBC recent experience shows that competing with purely digital platforms is difficult work. I am not convinced that enormous retail banks have an optimal cost structure for this. Reduction costs, such as branch networks, may seem shrewd, but I’m afraid that it can simply consume their existing competitive benefits.

I can be wrong and Barclays can go from strength.

But I am always looking for a competitive advantage when purchasing shares. In the long run, I think that banking shares such as Barclays and Lloyds unattractive, considering their strategy, and I will not consider buying them.