Banking across the globe has been going through a major transformation over the last few years, and this evolution looks set to continue well into 2018, and indeed beyond.
It’s not news that the majority of retail-bank managers in Europe are concerned about the territory being lost to “the enemy”, those clever, customer-pleasing fintech companies. Fortunately, the end is not in sight for forward-thinking traditional banks that not only make the most of their formidable advantages and resources but also turn enemy into partner through coopetition.
Blockchain is moving beyond cryptocurrency exchange into the world’s most progressive stock exchanges, which are optimistic about the technology’s potential to cut cost, enhance speed and reduce risk. Before it revolutionizes stock markets as we know them, the decentralized digital-ledger technology faces a few obstacles, such as scalability and regulation, but those in the know are barely able to contain their excitement about its prospects.
API-based Open Banking, a financial technology born in Europe to achieve enhanced transparency, is among the latest banktech innovations that seem intent on shaking legacy banking systems to their core. The good news is that both customers and their banks alike stand to gain from the more competitive environment and stricter data processing that will result from its widespread adoption.
Without regulations, digitalisation is not feasible. New rules and laws are a headache for banks and increase the administrative burden while reducing client satisfaction. But they also create transparency and openness, which can lead to new and improved financial services. The challenge is how to provide new services in a customer-centric way. Regtech may be the solution.
Digital has transformed every business, from small to large corporates, some of which are cutting ties with traditional banks and going it alone with their own in-house banks equipped to handle the evolving complexities of their operations. Corporates require real-time solutions tailored to their particular needs, and expect their banks to take the time to understand them; how can banks win back their trust and loyalty?
Getting regulatory compliance right is a necessity for financial institutions today, because getting it wrong is a punishingly expensive mistake. Just as fintech has been rapidly embraced by the industry due to its many proven benefits, the new kid on the technology block, regtech, is set to blaze its own innovation trail, disrupting the old ways of doing things in a bid to cut costs.
Customers of financial institutions expect all of the latest digital innovations to be integrated into the products and services offered to them, but these enhancements can introduce new and more dangerous cyber threats to the sanctity of their personal data. Never before has combining effective cybersecurity, ever ready to confront today’s emerging risks, with rapidly changing technological improvements been more critical.
App developers are shooting ahead like missiles, struggling to outdo each other in the creativity department, and customers are loving them for it. But are banks keeping up, or have they been left out of the digital party, still struggling with outdated systems that simply “don’t do” technology all that well? 2017, characterized by the unexpected, is separating the serious contenders from the rest.
Change has become the key word for European Union banks, and the European Commission’s Revised Payment Services Directive, set to come into effect next January, promises to level the playing field for banks and fintechs as well as uphold consumer rights, while also possibly changing the face of traditional European banking beyond recognition. How are banks coping with the challenges and demands of the PSD2?