By: Madhusudhan Magadi, SBU Head for BFS America region​

Global Banking and Finance Industry is undergoing a major transformation due to an ​increasing impact of several factors, such as rapidly changing consumer behavior, increased regulatory expectations, and proliferation of new technologies. Technological innovation is set to change the way banks work, and with that in mind, we’re sharing top technology trends in this evolving sector:

Platformication: Instead of competing, banks and fintech firms will partner more than ever in the coming future, leveraging the banking advantages of scale, stability, trust, experience in navigating regulations, and the access to significant capital. Conversely, by leveraging the agility, innovation culture and technological expertise of fintech firms, banks will become the hub of distribution for a broader assortment of solutions.

Actionable Data: Insights within the lifecycle of an interaction/transaction. Real-time recommendations / advices based on change in financial profile of a customer.

Introduction of “Opti-channel” Delivery: Beyond “multi-channel” (delivery on multiple platforms), or “omnichannel” (delivery through all channels similarly), an Opti-channel experience delivers solutions, using the best (optimal) channel/s based on the customer’s need and preferred channel. In other words, rather than offering all channels for a specific solution, big data will enable an organization to point the consumer to the channel that will provide the best personalized experience.

Executing on Innovation: Although innovation is a proven path to differentiation and competitiveness, the banking industry’s short-term focus, siloed approach to operations, and risk-averse culture, work against the potential for meaningful advancements.

Exploring Advanced Technologies: Blockchain Technology, Robots, Artificial Intelligence (AI), Biometric Authentication and the Internet of Things (IoT), will be gaining traction in the next 12 months, most panelists believe the debate can only be around timing.

Emergence of New Breed of Banks: The term “challenger bank” is widely used to describe a banking organization, started from the ground up and built without relying on another banking firm for back office support. While more common in the UK at this time, this breed of bank could emerge in the US.

Mining New Talent: Attracting and retaining top digital talent that can support this internal cultural shift will become a priority. According to recent study, “Sixty-one percent of digital organizations see shortages of digital skills as a top challenge in digital transformation, and are concerned about how they can attract and retain top digital talent.”

“It is imperative that we find experienced talent to develop disciplines like Design Thinking, Lean Start Up and Open Innovation. “These three capabilities allow a banking organization to design for the customer, to speed up value delivery and to create those customer experiences that we are all aiming for,” adds the study.

Responding to Regulatory Changes: New European regulations requiring banks to offer Application Program Interfaces (APIs) to the open market are set to have an enormous impact. This is both a threat and an opportunity, with many banks not having worked out a response yet. While there has been no similar regulatory changes in the US that would open the door for fintech firms to compete more openly here, it will continue to be important for all players to move in lock step with future changes. Delivering on these opportunities may be a challenge, however, legacy technology makes it difficult to keep pace. Regulators are increasingly focused on fintech upstarts. Time will decide where and how to tighten oversight vs. create a sandbox to protect innovation.

Conclusion:

Banks will step up their game technology-wise, as they’ll continue to partner with fintech startups and they’ll begin rolling out useful mobile wallet apps that compete with Apple Pay, Samsung Pay and Android Pay. They will also start to pilot and deploy blockchain-style software for payments, trade finance and securities settlement. Finally, they will find a mutually agreeable way of sharing customer data with data aggregators and personal financial management providers to deliver a better customer experience.​