What can we say? December days always put us in a nostalgic mood. Let’s have a quick look at the key digital banking trends analysts, researchers and visionaries predicted for 2019 and see some of the hits, the misses and the here-to-stays.
So long, legacy systems!
Major analysts foresaw the demise of banks’ core banking systems in 2019, aka the single biggest blocker to digital transformation in financial services. It was just as well, given that Gartner downright predicted that by 2030, digitalisation – or the lack of it – would make most (think 80%) traditional players completely irrelevant or go out of business. Vice President David Furlonger warned: “Digital transformation is largely a myth as institutional mindsets, processes and structures stand firm. Established financial services providers will have to move faster on digital business by building digital platforms or finding niche products and services to sell on others’ platforms.”
So, has this myth become reality?
There’s definitely been some progress. In June, Royal Bank of Scotland Group’s digital wunderbank,NatWest became the first mainstream bank to roll out selfie-powered current account opening, for instance.Global Finance Best Digital Bank Awards winner ING has continued tapping into key disruptive technologies such as big data, AI, ML, blockchain, biometrics and robo-advisors to ‘amazonify’ its offerings. Are we nearing digital banking nirvana, then? Not quite, Tamás Braun, W.UP’s Sales Director, says.
“Using progressive technology does not equal progress. The human or cultural element is just as key to any successful digital transformation process. Legacy technology is not the biggest blocker. Legacy thinking is.”
– Tamás Braun, Sales Director of W.UP
Will the real banks please stand up? I repeat…
Whether big tech will finally break into banking and corner the market in personal financial services kept everyone on the edge of their seats last year. Well, not anymore. Here’s a quick recap: in March, Apple unleashed Apple Card, its brand new credit card with zero fees, super-low interest rates and better rewards. A few months later, news broke of Facebook’s humble plans to create a new global digital currency, Libra, along with digital wallet Calibra that lets people wire money to people with the ease of sending an emoji. And now Google’s ‘smart’ current accounts are all the rage. Or will be, starting in 2020.
Has banking as we know it come to an end, then? Again, not so fast. “There’s a lot of confusion in the news media and, quite honestly, in the banking industry as a whole about what these moves mean for financial service providers and customers,” Tamás explains. He continues: “Tech companies will never become banks and offer banking services, period. What we see more and more of is tech companies teaming up with banks. And we’re not only talking about tech giants here. In the UK, for example, digital challenger bank Tide has joined forces with ClearBank to transform banking for SMBs.”
You can sit with us
Making better use of data has long been preached by digital evangelists but this year their voices have grown deafening. “Data is not oil. Oil is a fossil fuel with limitations. Data is air that allows us to breathe and thrive. Lose air and you suffocate. That’s what’s happening with the battle between FinTech, challenger banks, Big Tech and incumbent banks,” Chris Skinner warns in his latest blog post. “I’m saying many incumbent banks are suffocating. They just don’t know it yet,” he adds. And as more and more savvy challengers enter the financial services arena, with their cushy digital experiences and personalised offerings, air is running out fast.
But it might just be those dreaded challengers who’ll throw them a lifeline. “The future of banking is together. To survive and thrive, big techs, fintechs and incumbents will have to find ways to cooperate and complement each other’s strengths,” Tamás says. In his opinion, tech giants’ latest forays into financial services is a clear indication of that. “Client experience will make or break value propositions in the future. At the end of the day, Apple Card is a simple credit card issued by Goldman Sachs. It’s the smooth user experience and the real-time insights that turn it into a competitive edge.”