Speaking at a business forum at the 32nd Australasian Finance and Banking Conference in Sydney on Monday (16 December), Mr Kearns said there were several issues facing banks that could potentially lead to even bigger changes in the following years.

The first is the general increased access to and ability to process vast amounts of data.

“This facilitates the emergence of new, technology-driven competitors to banks that could potentially affect their dominant position in the financial system,” the RBA’s head of financial stability said.

"Second is the impact of tighter regulations on banks. Third are the expectations of the banks' obligations to the community.

Mr Kearns noted that a major influence on banking at the moment is the rapid pace of technological change: "We are currently seeing a huge increase in the availability and ability to process data."

He believes this could undermine, or perhaps even eradicate, banks' historical advantage in assessing credit risk.

"There are two parts to this: regulatory changes mean that banks' personal customer data can be shared with others and, secondly, that non-banks have some data that is useful to the banking business," he said.

With the advent of Consumer Data Rights (CDR) and open banking, customers will soon have the ability to share their account details with other institutions, including non-banks. Using this data, a non-bank can, for example, offer accounts or cards that better suit the customer's needs, or use the information for a detailed credit assessment. In addition, comprehensive credit reporting (CCR) will provide (bank and) non-bank lenders with more information about the credit history of potential borrowers.

Mr Kearns emphasized that non-bank data is becoming increasingly valuable to "bank" services.

“Much of this data is collected by 'big tech' companies like Google, Apple and Facebook. For example, PayPal and Amazon have significant data on the sales of their merchant customers, while interactions on social networks can be used to predict borrowers' commitment to repay their loans,” he explained.

“Technology firms, for whom collecting and analyzing data is in their DNA, are a new type of competitor for banks, which in the past have struggled to take full advantage of the personal data they hold. How well individual banks respond to technological challenges will no doubt influence their relative success.”