Change is imminent in banking, and as we begin the new year the only debate seems to be what is going to be driving that change. Over the course of 2017, what is going to transform banking the most? Well, we have some ideas.
1. IOT Voice Commerce/Voice Payments Smart Homes/Smart Cars: What’s the Bank’s Role?
Voice will be to screen what screen was to keyboard: a disruptor. And not just in banking. At the Consumer Telematics Show last week, for example, Toyota’s Sandy Lobenstein, VP of connected strategy & product planning, predicted that as voice assistants become more mainstream in cars, in-vehicle voice payments will gain traction as well. And considering the existing lineup of “talking cars” – Nissan and BMW with Cortana, or Hyundai with Google Home, among others – that perspective is not far behind the horizon.
From cars to kitchens: Mastercard and Samsung, as well as Amazon and LG, have jointly developed new additions to their smart fridges, allowing users to order—and pay—for their groceries through voice. The announcement was made this past month, at the CES 2017.
Even Vegas hotels are jumping onboard with the voice revolution. So what is a bank to do?
Figure out what voice will mean for banking and fintech. Capital One, for example, has already begun testing applications with both Cortana and Alexa. Other FIs, such as US Bank and USAA, are looking to voice tech as an additional layer of security. Whatever the use cases may be, and whatever the assistant is named, the power of voice in banking won’t be ignored this year.
2. Mobile Banking Continues to Advance
This will probably be a trend until all of the banking Old Guard (from paper checks to EMV chip cards) has gone gentle into that good night–and then it will be replaced by wearables–but mobile continues to make inroads across the world, especially when juxtaposed with the less than quick global adoption of traditional banking methods. This means it’s still a trend–and one of growing importance for those financial institutions that want to keep up with consumer needs. In 2016, 95% of the world lived in an area covered by a mobile-cellular signal (though, granted, that is not the same thing as having a smartphone), and for the first time in history, mobile browsing exceeded that of desktop browsing, with a proportional bump in mobile shopping. So what does that mean for banking in 2017? Well, can your consumers pay, shop, transfer, and deposit through mobile? If not.. might be best to fix that quickly. 86% of millennials already use mobile banking, and the other generations aren’t far behind.
3. Regulatory Upheaval: PSD2, Trump, and Beyond
If there’s one area looking like a powderkeg for 2017, it’s regulation: anything from European institutions gearing up for the dawn of PSD2, to the potential end of Dodd-Frank, regulatory change has the potential to turn the current financial landscape into something all but unrecognizable. The results of the regulatory ripples set in motion from events such as the Brexit and the election of President-Elect Trump will begin to be seen this year. While PSD2 won’t actually be implemented until next year, its impact on how banks and fintechs will have to treat consumer data is going to echo through the industry for years, even if the best outcome for banks is achieved (where more transactions are conducted directly through the bank account as opposed to through cards). Consumers grew less and less tolerant of watching their data slip through their fingers in 2016, and that’s only going to continue this year — meaning the way the financial world chooses to treat that data is only going to grow more important. Other regulations have the potential to put fintechs and banks on the same side of the board, like the OCC’s decision to grant limited charters to fintechs, while still others might eliminate some of the methods where fintechs have historically prospered over traditional institutions (most notably in the world of lending). In other words, keep both the compliance and IT departments running tight this year — 2017 is going to be a year of tremendous regulatory change.
4. Finance in Virtual Reality
Remember the crazy, proof-of-concept video on holographic workstations that Citi released last year? This one here:
Citi illustrates how the technology for virtual reality can be applied in banking, and specifically, in presenting trading data to users in a dynamic 3D view.
Similarly, a Polish startup Comarch demoed its own VR investing app at Finovate Spring last year. The VR experience offers a personalized newsroom, meetings with advisors, and portfolio overviews. While these may seem like far-off concepts, even old-time players like Charles Schwab recognize VR’s potential. Neesha Hathi, EVP of investor services platform, said the technology can provide new ground of communication between clients and advisers. “Newer generations want to interact on a different platform, so the way you find advisors, collaborate with clients, and educate are all undergoing a transformation,” Hathi said during the InVest 2016 conference. “Digital advising is not new, it is simply accelerating.” And going virtual.
5. Artificial Intelligence and Machine Learning
From risk assessment, to smart product sales and chatbots: artificial intelligence and machine learning already are (or should be) at the core of any bank’s innovation roadmap.
Startups across the board have demonstrated what AI can do for FIs of the future: Just check out this lineup of startups from last year’s BBVA Open Talent Challenge.
Chatbots and virtual assistants are getting smarter by day, and while some banks choose to partner in order to deploy the tech, others, like Bank of America with “Erica”, choose to develop their own bots. With Facebook opening up its developer platform for chatbot builders, the timing couldn’t be better to do some in-house AI work.
In short, FIs, maybe gear up with some AI engineers and developers.
6. Blockchain: Out Of the Lab, Into the Real World
Blockchain isn’t going away either: in 2017 we’re going to see blockchain, blockchain everywhere (and still not a bitcoin to spend), from saving bankers millions on derivatives, to good old money transfer systems, to e-commerce.
2017 may not be the year that everything will run on blockchain, but it’s certainly going to be the year we take those all-important first steps–away from proof-of-concepts and into the big bad financial world. Remember blockchain-for-data? We’re going to start seeing a lot more of that too.
It’s just over a week into the new year, and already new blockchain projects for payment, trade, and other areas of banking have been announced–while projects like Hyperledger and R3 continue to grow.
(Contributing Source: bankinnovation.net)