The chief banking regulator has warned some of the country’s big banks or insurers could go the way of Blockbuster Video, saying upstart financial players and angry customers may spell the end of traditional firms.

Australian Prudential Regulation Authority chairman Wayne Byres used a speech yesterday to caution major firms that substantial technological changes could prove too much for legacy bankers and insurers just as customers demand more personal treatment.

Speaking at the Curious Thinkers conference in Sydney, Mr Byres said though the traditional financial landscape appeared settled, it could move fast on the back of technology and fintech start-ups.

He said unless established firms were prepared to change they could easily go the way of household names that once appeared unassailable.

“Right now it seems inconceivable that any of Australia’s big banks or major insurers might not exist at some future point,” he said.

“But the same was no doubt once said about dominant companies such as Remington typewriters, Kodak, or Blockbuster Video. Not every financial sector business or business model will navigate their way through the intense period of change we are experiencing.”

Both sides of politics have been open in backing the advent of fintech competitors in a field dominated by the four big banks and a handful of major insurers.

The royal commission into the financial services sector has uncovered damning evidence against the two sectors.

Mr Byres said the problem for established players was the low cost of entry into the field. He said the traditional business models of many firms would be uncompetitive unless they ramped up their investment in new technology while also being assured their systems could withstand nefarious attacks.

“Our reviews emphasise that, to facilitate new technology, investment budgets need to be increased, not just re-prioritised,” he said.

“They will also likely need to be maintained at a higher level than has been the case, to allow for a catch-up on the backlog of maintenance that is needed.”

Another problem for financial firms was consumers who might be more willing to move given the revelations out of the royal commission.

“Customer loyalty appears to be declining: consumers are increasingly comfortable switching brands, trying new technologies and conducting business online,” he said.

“Successive scandals in the financial sector, highlighted by damaging evidence exposed at the royal commission, have also rightly encouraged consumers to think harder about how they manage their money.”