Top 10 Trends in Retail Banking 2018 What You Need to Know Contents
Introduction 3
Trend 01: Banks Make Significant Investment in Digital Transformation 4
Trend 02: More and More, Banks Collaborating With FinTechs Through Different Models 6
Trend 03: Banks Look To Leverage Digital IDs beyond Authentication 8
Trend 04: Banks Strive to Bring Distributed Ledger Technology Out of Labs, Into the Real World 10
Trend 05: Banks Deploy AI and RPA to Increase Productivity and Efficiency 12
Trend 06: Banks Leverage Analytics to Transform End-To-End Customer Journeys 14
Trend 07: As Security Threats Recede, Banks Leverage the Cloud to Cost-effectively Streamline Processes 16
Trend 08: Digital-Only Challenger Banks Threaten to Beat Retail Banks at Their Own Game 18
Trend 09: Alternate Lenders Leverage Alternative Data for Providing Credit Facility to a Wide Range of Customers 20
Trend 10: Banks Connect With Third-Party Providers to Drive Customer-Centricity and Implement New Models 22
References 24
About the Authors 27
2 Top 10 Trends in Retail Banking 2018 Introduction
The global financial services industry continues to be disrupted, as FinTech adoption gains momentum among banking customers. Augmenting customer experience is the need of the hour as customers increasingly adopt digital products and services and digital-only banks challenge incumbents to deliver better digital innovation. As a result, banks are investing aggressively in digital transformation to enable nimbler processes and support digital products and services. They are also collaborating with FinTechs to learn and acquire innovative approaches and technological capabilities.
Under pressure to boost revenue, cut costs, and at the same time deliver a better customer experience, banks are investing in emerging technologies and processes such as digital identity systems, artificial intelligence, and blockchain. In order to provide seamless customer journeys, banks are automating their processes, making increasing use of cloud implementations, leveraging analytics for better customer engagement, and providing a more personalized and enriching customer experience. Regulations are also spurring banks and FinTech collaboration through various Open Banking initiatives, with banks now being mandated to share data with third-parties through APIs.
To stay competitive, banks must remain cognizant of numerous implications from within and from outside the financial services industry. This document aims to understand and analyze the top-10 trends in the retail banking industry expected to drive future dynamics of the banking ecosystem.
3 Trend 01: Banks Make Significant Investment in Digital Transformation
Banks are investing aggressively to digitally transform as competitive pressures and customer expectations rise.
Background • FinTechs have accelerated the digital disruption and are maximizing the use of technology, giving stiff competition to traditional banks • Legacy systems and complex process architectures are limiting banks’ ability to enhance customer experience, impacting their advanced analytics capabilities • Increasingly, customers are choosing their primary financial services provider based on the ease with which they can operate their financial products, and are demanding a personalized experience: ––Experiences with companies across different industries, such as telecom and retail, have reshaped customer expectations
Key Drivers • Banks are facing stiff competition from agile FinTechs and digital-only banks that offer superior customer experience • Banks have a high focus on automation, big data, analytics, and innovation that require an agile architecture to support the digital ecosystem • Customers are getting more digital and tech-savvy, and this is creating demands on legacy bank infrastructure to support new modes of engagement: ––More and more, customers are migrating to digital channels that now form the bulk of banking transactions • To leverage the latest technologies and optimize cost efficiencies, banks are looking at end-to-end digital transformation