- Massive Investments in Digital Transformation
Experiences with non-banking industries such as retail and communications have shaped consumers’ expectations from banks and credit unions. As customers become more digital, more demanding and more tech-savvy, legacy bank infrastructure is strained to support new modes of engagement and grow digital efforts significantly. In response to increasing competitive pressures and people’s rising expectations, financial institutions around the world are investing aggressively in digital transformation projects.
- The Frontiers of Innovation
According to a report from Synechron, blockchain and artificial intelligence (AI) will continue to disrupt the financial services industry. AI development will focus on cognitive use in the sales, marketing, investments, wealth management and compliance sectors of the financial services industry. This is a critical step in moving from advanced robotic technologies like machine learning and predictive analytics to real growth in cognitive computing. Synechron also predicts that robo-investors will become the centralized fintech platform for wealth managers.
- Digital-Only Banks Become a Real Threat
With the entire banking industry shifting to digital channels, digital-only players will pose more and more challenges to the historical dominance of traditional banks and credit unions. According to Capgemini’s Top 10 Technology Trends in Retail Banking, this new breed of banking providers has defied the conventional model with highly innovative products and services with mass appeal to today’s digitally-savvy consumer. These challenger banks will fuel increased competition in the industry, forcing traditional financial institutions to improve their digital offerings and extend their reach to fend off these disruptors.
- Design Thinking
Synechron says that “design thinking” needs to be combined with creative engineering to bring the UX vision to reality. Banking providers will focus on a few key use cases and technologies where customer-first design is key, like account opening and augmented reality. Augmented Reality (AR) and Virtual Reality (VR) will benefit from developments in immersive UX design aimed at improving the customer experience. The account onboarding process will see a boost from UX design technologies in the form of a more interactive and gamified experience with natural language processing and machine learning.
- Real-Time Risk Decisions
AI will also support risk management by improving the enterprise-wide risk analysis needed to fulfill the changing needs of the organization. Given the pace at which the financial services industry moves, the goal for 2018 is real-time risk through AI/automation while operating within compliance and regulatory parameters.
- Alternative Lenders Leverage Alternative Data
Capgemini says that the 2008 financial crisis left banks and credit unions at a disadvantage with credit challenged consumers. This combined with the emergence of online lending technology and streamlined lending processes made room for alternative lenders to thrive in this environment. According to Capgemini’s report, “these non-traditional lenders use technology-based algorithms and software integrations to assess credit profiles of customers and are also leveraging alternative data such as social media photos and check-ins, GPS data, e-commerce and online purchases, mobile data, and bill payments.”