The current pace of change in banking dwarfs any former precedent. And the future of digital banking will match the fastest evolutionary pace ever recorded. A visible shift in the delivery of digital banking services is clear to all those participating in the industry – and more importantly the customer is now seeing this as well.
About fifteen years ago, more than half of all banking transactions occurred within the branch network; today, that number is down to less than 10%.
The bigger news, however, is that by 2022, at least one in two transactions is likely to flow through channels not owned by banks but by a multitude of digital ecosystems, FinTechs, and other third-party interfaces, thanks to Open Banking and the rapid rise of digital channels.
Clearly, new digital realities are closer than they appear. In this rapidly changing universe, winners will be those that are agile enough to anticipate and respond to change, innovative enough to create and deliver new customer value, and competent enough to take advantage of the fresh possibilities presented by digital technologies.
Their sharpness of vision and speed of execution is what will define them. And a remarkable understanding of changes not only within the industry but also implications of developments outside of it is what will differentiate them.
A truly digital strategy to take advantage of APIs for customer-centric innovation, new Open Banking realities, and transformational industry trends will be crucial for success.
This report, 12 Trends Reshaping Banking in 2019, brings to you twelve trends. Each trend points towards the definitively apparent role of technology as an enabler and driver of business. In 2019, all banks will accelerate their digital transformation efforts and journeys to interlock technology with business for substantively positive outcomes.
6 key technology trends for banking in 2019
- Accelerating architectural evolution – Banks will embrace principles of deep business focus, true agnosticism, pervasive analytics, open source, and comprehensive automation as architectural principles, to achieve new levels of agility, scalability, and resilience.
- AI in the bank – Benefits of AI in existing use-cases of customer services and fraud management will scale up, and the technology will find greater application in compliance, precision marketing, and even talent management.
- Blockchain – Blockchain use cases in banking will expand, and large networks will become crucial for meaningful value.
- Steady advance towards public cloud – Public cloud will emerge as the preferred choice of tier 2 and tier 3 banks looking to expand operations. API-driven business initiatives and new digital channels will also drive adoption.
- Accelerating connected commerce – Many banks will begin offering basic banking on smart voice-assistants. IoT adoption will accelerate in the trade finance and lease financing business.
- Increasing interactive dimensions – Mixed reality (MR) starts becoming a reality for banks. Banks will pilot use cases such as virtual branches, and mobile applications augmented with MR.
6 key business trends for banking in 2019
- Transition towards platform business model will accelerate. The traditional vertically-integrated pipeline business model where banks manufacture and sell their own products is giving way to marketplace-driven banking.
- Customer journeys will advance to the point of primary intent. Banks will craft journeys that begin when a customer contemplates buying an asset, not when he/she comes looking for a loan to finance that asset.
- Open Banking will make banks evolve their API strategies and align them with business and product strategies closely, as they expose more APIs and take them live with production data. However, banks and FinTechs will continue to grapple with the challenge of multiple API standards for some time.
- Cyber-Defence vs. Hacker Intelligence – Banks will enhance their security controls and make significant investments in security talent, tools and expertise to combat the rising threat from evolved hacking techniques.
- Optimizing digital-human interplay – Workforce and culture practices will adapt to attract and retain multi-generational talent. Banks will also welcome talent from outside of banking to become more diverse in a world of blurring industry boundaries.
- Data privacy and ethics – As banks navigate the dual challenge of sharing data for customer-centric innovation mandated by regulations, and protecting customer interest, they will find themselves stepping up for a new role, the role of facilitating secure exchange of customer data with third party ecosystems.
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