With tech-driven initiatives such as Open Banking poised to change the industry in 2018, not a lot has actually happened. Consumer behaviour, however, has been evolving, and it is technology which is narrowing the gap between what consumers want from their bank, and the traditional way their bank deals with them. So, what will technology bring to bank trends in 2019 and what will be the tech trends in the banking sector?
1. Open Banking
It started with more of a whimper than a bang in 2018, but a year on, adoption of open banking is slowly growing, even though a recent study showed the majority of adults don’t know what it is.
The regulation determined that banks needed to open their APIs to other regulated brands, with a view to new products being developed that would benefit consumers. On the one hand, being able to see your personal banking data across all providers in one space allows you more control of your finances and is of definite use to the end consumer. However, there are concerns about security and whether allowing a ‘one stop shop’ view of all your most sensitive data is sensible, even if it does get you cheaper car insurance. The banking sector is trying to put minds at ease by ensuring that all apps that ask for this data are regulated, so if you fall victim to any fraudulent transactions, you are protected in the same way you would be with any other form of banking.
Fintech start-up Iwoca has been making good use of the technology. By allowing small businesses to share up to 5 years of transactions for all funding sources with the app, decisions on their loan applications are given based on actual business performance and not just credit score.
As adoption continues, we should see an increase in apps and products that offer real value to consumers in all sorts of ways.
The technology behind cryptocurrencies like Bitcoin represents one of the major security tech trends in the banking sector. As data becomes increasingly important for offering personalised, useful customer experiences, the necessity to keep that data safe and secure increases too. Blockchain allows for enhanced security because of its decentralised nature – no one participant in a blockchain keeps the data, so no one participant is vulnerable to attack. It also means that every participant in the chain can see transactions as they occur, allowing for greater transparency. Data can’t be altered or deleted, so accuracy is greatly improved.
Within banks themselves, this will help speed up and streamline internal processes, and also make auditing a lot easier. As far as dealing with clients goes, increased transparency and security go hand in hand with increased trust.
3. AI (Artificial Intelligence)
Adoption of artificial intelligence (AI) is happening slowly, yet significantly, in the banking sector. In 2019 we are likely to see further development of AI within customer service. Many banks are already using this tech to improve the chatbot experience for customers, to aid customers needing answers to their banking queries. Advances in natural language processing, as well as social and emotional intelligence for AI, could be leveraged to help customers get valuable, personalised attention and advice, without having to wait for a human agent to become available either in chat or on the phone.
Simultaneously, research continues in fields such as machine learning, where banks are in an advantageous position, as they have vast amounts of data available to plug into these programs. Improvements in pattern recognition and logical reasoning could help banks to determine fraudulent transactions or behaviour more effectively.
4. Big Tech
One of the most intriguing bank trends in 2019 may not come from banks at all. Tech giants Google, Amazon, Facebook and Apple may start to venture further into banking. Apple’s ApplePay app has seen consistent growth in adoption by both consumers and businesses since launching in 2014, with Google Pay seeing similar uptake.
In March 2019, Apple announced their next step with the promised summer launch of Apple Card. Backed by Goldman Sachs and Mastercard, the credit card seamlessly integrates with Apple’s existing products, allowing greater visibility over spending and interest charges. Meanwhile, Amazon are rumoured to be in talks with a bank to support a current account product, targeting younger consumers and those who don’t currently have a bank account.
Traditional heavyweights in the banking sector are right to be concerned: a 2018 survey by Mulesoft showed that a third of adults would consider banking with a tech giant, rising to 52% of adults under 35. Although major data breaches at Facebook present a security concern, it seems that most millennials are happy to waive these fears for greater ease and integration with their daily lives. For the digital native, convenience is king.
5. Digital banks
One of the major tech trends in the banking sector is the rise of digital-only banks. Starling and Monzo increased their marketing considerably over 2018 and it seems to be working – currently Monzo is seeing 28,000 new accounts opened every week.
Customers who are used to dealing with everything at the tap of a button, see no reason why their banking experience shouldn’t be the same. The immediacy of digital banks is an attractive alternative for customers who live on their phone. Digital banks can harness technology on these devices to provide value to their customers – they can see real-time spending breakdowns, set themselves budgets on particular products, and authorise payments immediately with their phone’s own ID verification capabilities, without needing to know the other person’s bank details, as it can all be done over Bluetooth. Combine that with no fees on things traditional banks charge for, such as spending on your card abroad, and you have a very attractive proposition for the Facebook generation.
As for bank trends in 2019, we will likely see traditional banks try to harness this digital-first approach in a bid to appeal to younger customers.