The rising tide of fintechs and non-traditional financial services challengers to the banking sector has been given a qualified tick of approval by technology research and advisory firm Gartner.A new report, presented at the Gartner Symposium/ITxpo on the Gold Coast this week, asserts that by 2030 only 20 per cent of "heritage financial firms" will "flourish and win", primarily through the use of online platforms - either as a shared service of built by players large enough to achieve their own economies of scale.The flipside of this prediction is that margin erosion will see 80 per cent of the rest - estimated at some 36,000 current financial services firms - cease to exist or, at best, they could "become commoditised or achieve zombie status".This dire analysis by Gartner takes as its starting point the track record of US banks in the years either side of the 2008 financial crisis:•    return on equity has remained a flat 9.1 per cent since 2012;•    return on assets has remained at 1 per cent, and this tracks as far back as 1992; and•    net interest margin is at a 30-year low of 3.1 per cent.Assessing what has become an asset-heavy sector, Gartner warns the future of the financial services industry will evolve increasingly towards "weightless" models - that is, requiring few physical assets to establish or maintain a presence. "Peer-to-peer consensus algorithms can directly match borrowers to those with money, without requiring a bank to mediate," the report says. That makes the existing banking industry, if it continues with 20th century business and operating models, especially vulnerable to disruption by digital competitors. The signs are already there, with emerging financial services players using digital technology to change the economics and business models of the industry. Echoing many of the same arguments aired by Australia's emerging banks at Sibos in Sydney last week, the Gartner report states that: "millennials and other consumers don't like to use traditional banks for all services. Fintechs and alternative providers have capitalised on this opportunity to accelerate consumer lending and even corporate lending, starting with small and midsize companies…."Gartner cites Alibaba's Ant Financial, a full-service online provider, as a prime example, with more than 600 million customers and US$300 billion in deposits. Lower costs and more efficient transaction platforms enable Ant to pay interest 150 basis points higher than traditional banks.And the UK based Metro Bank, running another digital only business model, grew its revenue 62 per cent in 2016, and its customer accounts increased by 40 per cent.However, most financial services providers told Gartner last year that they do not expect to transform digitally. The firm surveyed financial services CEOs in 2017 and found that 71 per cent believed their organisations could compete in a digital world without changing their business model."This attitude is dangerous because it underestimates the degree of change that digital technology will bring to the industry," Gartner says, noting that regulatory support for open banking in countries such as Australia, Brazil, China, India and the