What will 2017 bring? Here are some of the key trends we’re seeing in the banking industry:
Security improvements become a top priority in the face of ever larger cyber threats
In the face of rising fraud and organised cybercrime, banks will make improving security their number one priority in 2017. Technologies like blockchain-enabled smart contracts and biometric authentications for payments and online access to financial services platforms will start to become commonplace. Biometrics in particular are likely to be increasingly offered in various ways as they tend to provide better security than conventional systems given their uniqueness to an individual. For example, more banks are likely to begin allowing customers the option to sign into their mobile banking app using their phone’s fingerprint scanner.
Additionally, banks will pursue more possible applications for blockchain technologies over the coming year in the form of partnerships with startups, the creation of incubators and innovation labs and collaborations with other players in the financial services industry, such as the recently created Hyperledger Project.
Open API adoption will accelerate the movement towards ‘Banks as a Platform’
Banks will begin to open their APIs to allow FinTech firms and other developers to build a wide variety of innovative, consumer friendly products which will be available as apps which are hosted on a bank’s online platform . This will essentially provide a one-stop shop for customers by offering them a wide variety of products and services within third-party apps as well as their bank’s core offerings. Requiring relatively minimal infrastructure development, this will open the door to entirely new revenue streams for banks and allow them to compete on a level playing field with FinTechs and other non-traditional competitors. With APIs set to become the center of competition in the banking industry, there will be a growing number of alliances and acquisitions established in order to make successful API integration within the banking ecosystem.
Increased investment towards the development of emerging technologies
In the coming year, banks will make a greater investment towards innovation leading to the rolling out of emerging technologies such as artificial intelligence and augmented reality. While the application of augmented reality in banking is expected to increase over time, banks in 2017 will mainly use this technology to provide location-based offers, create virtual ATM locators, allow on-demand access to speak with a relationship manager, make payments and more. On a limited scale, some banks may begin to test augmented reality for business service applications, such as virtual workstations for traders.
Artificial intelligence, which was also a large focus for banks in 2016, will receive even greater investment as banks start to experiment with what roles this technology can play in customer service activities, such as placing humanoid robots in physical branches that can greet and converse with customers.
Increasing numbers of banks moving to the cloud will trigger sale of data center assets
While the banking industry previously shied away from public cloud implementation due to shared infrastructure and its perceived security and regulatory risks, public cloud providers have responded and over the past year have introduced more security and compliance services. With those concerns fading and pressures to cut costs increasing, many big banks will focus on public cloud deployments in 2017, with use rising as much as 30 percent within three years. Banks will mainly focus on shifting customer relationship management, IT development, application infrastructure and analytics to the cloud over the next year, although acceptance for other banking functions could emerge as well.
As banks move to the cloud, they will no longer need to own and maintain costly, physical data center sites, and will begin to divest those properties en masse; at least three of the largest global banks are all expected to reduce or eliminate these assets in 2017 and other banks are likely to look to do the same over the coming year.
Tomorrow we will explore some of our 2017 predictions around cybersecurity.