The new year brings new discussions on how traditional banks can tackle digital disruption. Smooth customer journeys, improvements in data analytics and multichannel delivery are expected to be the key retail banking trends this year.
Top 2018 predictions for retail banking show a problem
Leaders in the financial services sector predict that removing friction from the customer journey will be the top trend in retail banking in 2018, followed by the improved use of data and advanced analytics and refinements in multichannel delivery, according to an annual survey by the Digital Banking Report.
The list of trends identified by the industry remained relatively consistent from the previous year, which could be a symptom of a greater problem: the banking sector is moving too slow and legacy companies are failing to differentiate themselves.
As the PSD2 clock is ticking, banks face two challenges
The banking sector must tackle two major challenges before PSD2 regulation is implemented on 13th January 2018: to secure their client interface and compete with fintech and big tech firms in the new world of open banking.
If external parties can offer a better user experience for customers, banks risk losing the ability to engage with their current users. But working with agile fintechs can help in delivering on customer needs, according to Bragi Fjalldal, VP of business development at Meniga.
Bitcoin of England: no need for a retail bank in the UK?
The Bank of England has set up a research unit to investigate the possible introduction of a crypto-currency linked to sterling, The Telegraph has learned. If approved, this virtual currency would allow British citizens to keep their money digitally with the central bank itself. The “Bitcoin of England” could dispense with the need for a retail bank.
Popularity or profitability: Monzo loses £50 on each client
British digital banks Monzo or Starling Bank want to make money by allowing other firms access to their customers rather than lending to them. If this model is successful, digital banks could eat into the retail banking profits of the big banks.
But it is an untested path to profitability and absorbing costs has been expensive for some of the upstarts, Reuters said. Until recently, for example, every customer meant a loss of £50 as Monzo offered services such as overseas cash withdrawals for free.