Mobile has been the key driver for innovation in the digital
space, and banks have long since moved from the "mobile-also" to "mobile-first"
strategy. While this strategy has helped banks to transform for their digital
journey, nowadays with the rapidly evolving capabilities of mobile phones,
technology has proved to be somewhat of a moving target to keep up with.
Has the milk-ordering-refrigerator
symbolism of the Internet of Things distracted other businesses from seeing its
true significance? As an example, consider the banking industry, which hasn't
paid much attention to the IoT so far. A leading analyst's prediction that
about half of all sensors installed by 2020 could be relevant to financial
services, should make them sit up and take notice.
In the past year the banking industry has been buzzing with
the benefits that blockchain technology offers and progressive banks took a
step further to implement blockchain pilots to test out these benefits. 2017 is
going to be the year when blockchain will move out of its pilot phase, and into
production. This is going to be the year when blockchain will be mainstream,
and the giants of the financial services industry have already indicated that blockchain is here to stay.
Blockchain has been a topic of discussion ever since its
inception in 2009 as the underlying technology for Bitcoin. The industry has
seen intense debate and deliberation on the potential of blockchain, with many
claiming, that it is as foundational, as the internet. Some banks state that
they have moved past deliberation stage on blockchain, and are starting proof
of concepts around this technology.
On their journey towards a truly digital transformation,
many banks stumble upon the barrier of outdated banking architecture. As Tom
Groenfeldt, contributor to Forbes, says, "When
40-year old legacy banking systems meet the two-month old iPhone 6, the results
aren't pretty." Banks are now looking for ways to bypass this barrier to
keep up with the latest crop competitors and offer contextual customer
Banking as we know it will cease to exist in 2017, and
regulators and governments have recognized the need for open banking initiatives
in the current environment. The Indian Government recently launched the United
Payments Interface (UPI), and the European Union passed the PSD 2 regulation to
promote open banking. With open banking initiatives and regulations coming into
play in the global arena, it is a clear sign for banks to change their
traditional mindset and collaborate to innovate.
In the past few years there has been rapid evolution and
adoption of digital technology that is disrupting established banking business.
But digitization has also thrown open significant number of opportunities for
banks to deliver sophisticated customer experience, smarter decisions and
operational excellence. We believe that banks need to implement a bold and
comprehensive "Truly Digital" transformation strategy to succeed in 2017; and
we have identified six technology trends that banks need to address in 2017 to
Unleashing innovation with open
APIs and open banking
Banking in cloud-first strategy
Blockchain: The race to production
AI - your sci-fi movie
imagination is turning into a reality
More things to bank on
Banking Architecture - driving
value with simplicity
You can read in detail about the top trends reshaping banking here.
The Infosys Finacle - Efma report on retail banking mentions
that 53% of the banks feel that pervasive automation will be one of the key
drivers for digital transformation in the coming year. While this makes a good
case on behalf of automation, the foremost question on everyone's mind at the
moment is, how are technologies like automation along with artificial
intelligence, will impact the workforce.
Artificial intelligence (AI) is going to become the
competitive advantage for banks in the future. In fact, a majority of banks
feel that AI is going to have a significant impact in the coming year as a
disruptive technology. Progressive banks are getting on board the AI train, and
now intelligent digital assistants are omnipresent in banking - from payments,
to money management, and financial advice as well. While progressive and
challenger banks are already off the starting block, it is expected that their
traditional counterparts will soon follow suit.
There is distribution, decentralization and
disintermediation of assets brought on by digitization in today's world. This
is the brave new world of the sharing economy, and businesses are partnering
with other service providers to bring value to consumers in a scalable and
flexible manner. When banking becomes truly digital, it will resemble the
business models of today's successful platform businesses like Alibaba, Uber,
etc. There is no other industry that is as pervasive as the financial services
sector when it comes to consumers; hence this makes a solid case for having a banking
service option embedded in all applications.