by Matt Phillips (VP, Head of Financial Services, Diebold Nixdorf UK/I)
Financial institutions know that they need to invest in new technology and new ways of connecting with their customers. In fact, according to a Capgemini report, digital laggards in the financial services industry are in danger of losing up to 35% of their total market share to digital pure-plays. So, from upgrading ATMs to give them iPad-esq interfaces, to making mortgage applications possible from a smartphone, we have seen a mass of new innovations from the traditional banks this year.
But this hasn’t been an easy process. While some financial institutions have been slow to adapt, others have attempted such a myriad of new innovations that they’ve been at risk of trying to achieve too much change at once.
In 2019 we’ll see a new approach. This will be the year when financial institutions hone their technological direction. Many will pick one key area to focus on, and they’ll do it really well. Here’s a look at why, and what else is in store for the industry in 2019…
Moving on from pilot schemes. From Natwest’s Cora to the National Bank of Canada’s experiments with blockchain, we have already seen banks implement many different forms of new technology in pilot schemes. In 2019 however, the onus will be put on getting a return on investment, which is likely to involve taking a focused approach to new innovations.
Honing homegrown talent. With the political climate having the potential to impact the free movement of tech skills across borders, some businesses are predicted to go into ‘supply shock’. They must therefore nurture and develop their own talented employees.
Getting the pace right. While millennial and Gen Z customers might leap towards the latest technology, some baby boomers would rather crawl before they can walk. One of the key challenges for banks in 2019 will therefore be to develop their technology strategy at a rate that suits the multiple demographics within their customer base.
The end of gimmicks. We’ve all got excited by next generation apps and banking assistant robots that have been announced this year. In 2019 banks will concentrate on making their new innovations count from a customer journey point of view.
Open banking opportunities. PSD2 was set to be the game-changer for 2018, with many in the industry seeing the legislation as a threat, as well as an opportunity. In 2019 we can expect the legislation to start to impact consumer trends.
New branch formats. Branch formats have been refined over the last few years, with many banks adjusting their portfolios to include flagship stores in high footfall areas, and a consolidated number of smaller stores, supported by transaction-heavy pop up or mobile branches in convenient locations. It has been a time of change and 2019 will see these new branch portfolios mature and get results.
Comfortable consumers. In 2014, 19% of consumers had biometrics on their smartphones. By 2018, this had risen to 7-in-10. The consumerisation of technology like this makes it much more comfortable for banking customers to use, so we can expect to see a growing amount of technology such as biometrics in banking.
Adding value with analytics. As a globe we are creating a mind-blowing 2.5 quintillion bytes of data each day. For banks, the challenge is to put data to work. In 2019, we will start to see banks use data more intelligent across different platforms to improve the customer journey, personalise the experience and predict how the customer will need to interact next.
‘As a service’ on the rise. The ‘as-a-service’ economy is well underway in the UK, with analysts expecting the XaaS market to grow 38% by 2020. Banks looking to make a better use of their internal teams in a competitive environment can be expected to jump on this trend to boost their internal agility.