The world is changing. Technology is disrupting existing industries; the usefulness of economists is being questioned; and customer expectations have been transformed in just a few years. Banking, one of the largest and most longstanding of all the major industries, has of course moved with the times. But we can expect more change to come, with technology at the heart of this.
In our recent report, Technology in a Transforming Britain, we spoke with business leaders across multiple industries and consumers about their relationship with technology. The findings were revealing. Despite half of business leaders from the financial services (50 percent) saying banks will not exist in their current form in a decade, an overwhelming 95 percent believe technology is the key to driving their organisation forward.
But what does the future of banking really look like? And what can we expect from this digitally transformed industry?
A more intelligent approach to banking
Customer expectations have changed. It started with the ease of use of apps on smartphones, and was built upon by the speed and convenience of services such as Amazon and Netflix. These transformational services mean people want and demand personalised, convenient and high-speed services across the board. Banking is just one industry that must keep up. In order to meet these expectations, a smarter approach to banking must be adopted. And in order for that to happen, banks need to make better use of their data.
While the use of data by banks has come a long way in recent years, there remains a long way to go. With a full data strategy that outlines exactly why and how a company uses data, collection, processing and management of data can be vastly improved. This is especially important right now as the General Data Protection Regulation (GDPR) comes into force this month.
It is only through better insights gathered through data that services can become more personalised. A bank, for example, may be able to offer a more appropriate payment model for someone with a credit card based on their spending habits. Better use of data will coincide with the use of two other key technologies—Artificial Intelligence (AI) and the Internet of Things (IoT).
When it comes to data analysis, AI will refine this process and help ensure its lifespan is managed appropriately. Ultimately, AI will be used to automate repetitive processes for banks, driving greater efficiency and accuracy.
With regards to IoT, the insurance sector has stolen a march on the wider banking industry, with a number of innovative applications already in the market today. Some insurers, for example, are fitting cars with smart devices to monitor a policyholder’s driving to deliver more flexible premium prices.
A closer, more valuable relationship with customers
Building better, value-based relationships with customers—moving away from transactional relationships—is how banks can build loyalty in an increasingly competitive market. Today, some people may feel they’re on the receiving end of seemingly random service offers, spam letters, emails and texts, let alone automated phone calls. This can be hugely frustrating for customers, and certainly does not add any value.
This is where AI, again, will make a huge difference. It will provide a far more convenient means of engaging with banks for customers. Chatbots, already in widespread use by banks and other industries, are really only at the embryonic stage. As technology develops and data feeds these robotic customer-service agents, the accuracy of their work will only improve. Assuming the data strategy is right, they will understand which services are relevant to a customer, when the right time to communicate these is, and when to just say nothing.
And consumers want this; AI is the second technology that they (13 percent) most want to see implemented to improve their experience in banking over the coming year. Given the potential impact of AI, it’s unsurprising to see that almost half (42 percent) of banking leaders are also looking to implement it in the next 12 months.
A more secure banking environment
The risks and challenges that cyber-security poses are real. In fact, more than half of the sector’s leaders (55 percent) say cyber-security is their biggest operational challenge today—higher than the average across industries (48 percent). At the same time, both consumers (15 percent—higher than any other sector) and banking-industry professionals (35 percent) want to see biometrics rolled out in the next year to keep the industry secure. With the popularity of Apple’s Face ID and fingerprint-recognition services on their iPhone devices sky high, these findings are perhaps unsurprising.
But the potential of biometrics doesn’t stop there. Today, palm vein authentication is offering even stronger authentication. The service works by comparing the pattern of veins in the palm (which appear as blue lines) of a person being authenticated with a pattern stored in a database. As the palm has a broader and more complicated vascular pattern, which contains a wealth of differentiating features for personal identification, the palm is an ideal part of the body for this technology. Fujitsu’s PalmSecure technology has a false acceptance rate tested at 0.00008 percent and false rejections come at just 0.01 percent, much more reliable than fingerprints. It’s already seen great success.
For Banco Bradesco S.A.—one of the largest banks in Brazil, along with Banco do Brasil, Itaú Unibanco and Santander Brasil—the escalation in the number of sophisticated crimes and frauds in the banking sector served as a catalyst for Bradesco to tighten its security. Because of its high levels of verification accuracy and hygienic and non-invasive application, the bank found palm vein technology to be more easily accepted by its customers.
Boosting productivity, efficiency and collaboration
Of course, we must not forget the—perhaps less glamorous but every bit as important—day-to-day impact that technology can have on productivity. In fact, improving employee productivity (47 percent), operational efficiency (38 percent) and fuelling business growth (37 percent) were the key internal benefits financial leaders attribute to technology today. This might be through better productivity tools, better connected workers with better devices and network tools, or more efficient cloud-based services.
The ways that teams are working together is already changing. Banks are increasingly moving away from functional teams to agile teams—with colleagues working more collaboratively, changing and improving things faster, with bottom-up initiatives aligned with strategic objectives.
Technology naturally facilitates this change, especially with cloud-based workplace tools that are intuitive to use and can be used wherever colleagues are working. These same tools can connect colleagues together quickly and easily. This will all be key to keeping up with a fast-moving business world in which expectations and needs can change in the blink of an eye.
A positive force for banking
Today, the sector is looking to use the latest technology to secure its position in a fast-moving market. An enormous 95 percent of financial-services leaders agree that tech is driving change in their organisations, and almost 9-in-10 (86 percent) are positive about this change.
With technology holding so much potential, and both consumers and banking leaders so enthused about the digital transformation of the sector, we can certainly expect further change. Technology will help deliver a better future for the banking industry, and for those who interact with it.