This year will be a decisive one for the banking industry. With the introduction of open banking and the second Payment Services Directive (PSD2), 2018 has the potential to be the most transformative year in a decade.
As the industry opens up, third parties are now joining the race to offer new applications and services to UK customers, introducing an increasing number of people to online banking.
We wanted to explore how these factors are impacting the industry and better understand the role of technology within this. The result is our recent Technology in a Transforming Britain Report.
One of our key findings, after surveying 2,000 members of the public and 647 business leaders, across a number of verticals, is that half of financial sector leaders believe banks will not exist in their current form in a decade.
This change is not however, taking place in isolation, or simply put, just between the walls of the bank.
From politics and international affairs to changing customer habits, banks are facing a number of external influences: Open Banking, GDPR, RegTech, the rise of robo-advisers, biometrics, and cyber security to name a few.
Moreover, banks are now not only competing with each other but with financial institutions new to the market – which are often companies well-placed to make the best of the latest technologies.
Inevitably, this presents a threat – but also an opportunity.
The financial services industry has already experienced significant digital change, but our findings suggest further transformation lies ahead.
Almost two-in-five (39 percent) consumers believe banker tellers will disappear within 10 years – which inevitably leads to the question:
What else can we expect from the bank of the future?
(More) intelligent banking
Looking at banks today, and the technologies they’re working to bring on board, one particular trend stands out.
We’re increasingly seeing more and more banks make their first moves towards implementing intelligent automation. This includes solutions based on Artificial Intelligence, Internet of Things, 5G and design-led thinking.
In fact, over a third (38 percent) have implemented Internet of Things in the last twelve months; while two-in-five (42 percent) plan to implement Artificial Intelligence in the next year.
What these new technology trends will do is create a new set of capabilities, which will facilitate work across teams and departments – be it the sales, technology, product, or marketing teams – so they could easier work together for the benefit of their customers.
Increased productivity and operational efficiency
Improving operational challenges, from increasing workplace efficiency to modernising processes, will also play an important role in helping banks deal with external threats. To keep their customers happy, banks have to make changes in their operating systems and the way they provide services.
Once again, tech is the answer.
Improving employee productivity (47 percent), operational efficiency (38 percent) and fuelling business growth (37 percent) are just some of the key internal benefits financial leaders attribute to technology today.
Ultimately, operational changes will allow faster adoption rates so banks can keep up with what customers want – and, in our fast moving market, rapidly respond to the new entrants.
Being closer to your customer – the next big thing
Banks are moving away from the traditional way of doing business towards a more agile model, and this has already been noticed by their customers. The ultimate goal is to be there for their customers, 24/7, all year around – to provide intuitive, efficient solutions and fast, secure services.
In fact, more than seven-in-10 (73 percent) of the public believe banking has already been dramatically changed by technology.
What is also encouraging is seeing that consumers today are ready to embrace new technology – and are welcoming change in the banking industry.
Artificial Intelligence (13 percent), biometrics (15 percent) and 5G mobile networks (10 percent) were the top picks amongst consumers asked what they would like to see implemented to improve their experience in banking over the coming year.
Customers expect a lot from their banks – and all financial institutions must ensure that they are ahead of the latest technology trends and keeping pace with consumer trends.
Technology – a force a good in the financial services landscape
Historically, UK banks have been at the forefront of innovation, leading the charge in adopting new technology.
Today, they’re looking to use the latest technology to secure their position in a fast-moving market, with a whopping 95 percent of financial services leaders agreeing that tech is driving change in their organisation, and almost 9-in-10 (86 percent) are positive about this change.
Technology will not make banks redundant.
Instead, it will transform their business model so the banks of the future are closer to their customers, providing innovative services and solutions.
Seven-in-10 financial sector leaders believe it is technology that will enable them to overcome many of external issues – and gain a competitive edge.
The multitude of new solutions technology is bringing to the industry – and the ease of access – means that banks today have access to a full range of tools to make them more competitive than ever.
When it comes to banking, both business leaders and consumers have a lot to look forward to.
As big transformations lie ahead of us, financial sector leaders should look for new ways to explore tech solutions and how these can enable banks to provide the best services for their customers.
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