‘Retail banking under siege from new techs, consumer expectations’
New technologies, such as artificial intelligence, machine learning, blockchain, the Internet of Things (IoT), and other technologies underpinned by data and advanced analytics, alongside changing consumer behaviour will continue to force financial institutions to modify their business models; latest Digital Banking Report has shown.
According to the report, the status quo in retail banking is tottering and under siege from new technologies, new consumer expectations, new competitors, and new regulations.
The report added that competition for business over the next five years is expected to be the greatest in the areas of payments and lending, with large tech firms, small fintech organisations and challenger banks being the biggest threats.
Forecast from those surveyed is that the importance of new technologies will only get greater in the future (2020 to 2025), and this is reinforced by the importance of regulations on data technology, which is also projected to increase in the longer view.
To remain relevant, the report identified the need for partnerships between banks and solution providers as well as collaboration between traditional banking organisations, adding that only with these alignments will organisations be able to be as agile and flexible as the marketplace requires.
Already, the siege from new technologies, has forced banks and credit unions to modify their business models, re-prioritise investments, change products and services offered, and ramp up innovation efforts, even as the report added that there has also been a rethinking of distribution options, with digital and third party channels significantly increasing in importance.
Titled, “Innovation in Retail Banking Report 2019,” the report authored by Jim Marous, co-publisher of The Financial Brand, and publisher of the Digital Banking Report, along with Infosys Finacle, brings together perspectives from over 350 senior banking leaders from financial services organisations worldwide.
“The following innovation trends are expected to take center stage over the next 12 months; serving a segment of one, expansion of open banking, becoming a ‘digital bank’, AI-Driven predictive banking, and payments everywhere.
“To be able to compete and grow where margins are thin, competition is fierce, regulations are changing and technology has an increasing impact, financial institutions must place innovation as a top priority.
“Organisational cultures must be shifted to support innovations that will impact increasingly outdated business models. Banks and credit unions must also anticipate consumer needs and innovate in ways that will prioritize the most effective mix of capabilities, processes, and people,” the report added.