Technology is probably the biggest disrupter when it comes to banking, so what are the leading contributors and why?
According to the World Fintech Report 2017 from Capgemini and LinkedIn, the rise of fintech has been aided by a “perfect storm.” Specifically, it cites “customer expectations, for more personalised and digital experiences, increased access to VC funding, accelerated advancements in technology” and the fact that this space has been “ripe for fintechs due to traditional firms leaving a gap of unmet customer needs.”
Technology changes have certainly been instrumental, although their impact varies massively and not all of them will ultimately succeed. What is obvious, however, is that card technology will underpin banking for the foreseeable future. In this article, we look at five key technologies that we believe will disrupt banking in the next few years, dragging it into the 21st century.
“The technology likely to have the greatest impact on the next few decades has arrived,” said Don Tapscott, author of Blockchain Revolution during a recent TED Talk. “And it's not social media. It's not big data. It's not robotics. It's not even AI. You'll be surprised to learn that it's the underlying technology of digital currencies like Bitcoin. It's called the blockchain.”
Tapscott is not alone in his belief. The idea that a technology can robustly authenticate every transaction is a game-changer. Some firms have already started exploring its potential, with experiments ranging from Accenture’s editable blockchain technology (allowing for regulatory edits) through to a number of start-ups being helped by the Financial Conduct Authority (FCA)’s Project Innovate programme.
Augmented reality (AR)
Visa’s unveiling of an augmented reality proof of concept in the summer was an interesting example of how mobile technology can change the way people purchase products at retail. The ability to overlay digital information on live images via a smartphone camera has always intrigued businesses, but few have actually managed to find a killer solution, certainly when it comes to payments.
Visa’s experiment is fascinating because, like many new technologies, cards and card numbers will remain at the root of the payment process. The use of technology like AR to improve the speed of payments and their flexibility will only continue.
With AI think ‘automation’. At the moment, this manifests itself in the form of chatbots, such as Bank of America’s Erica. While Erica can only be contacted via text or phone call for now, the idea is that the chatbot will eventually offer customers 24/7 banking advice via a mobile app. The aim? To improve and personalise customer service interactions, something AI is perfectly suited for. The smartest banks are already evaluating AI to see how it can help.
For example, AI could also be used as part of live transactions, automating payments for customers based on card data. But more importantly, an AI could also analyse a customer’s payment history, automatically suggesting alternatives to improve product and service selling.
The next mobile network technology, dubbed 5G, is due out in 2019/2020 and it will transform mobile banking with higher data speeds and greater signal efficiency. 5G is also expected to be the key driver for the Internet of Things (IoT), which will see more connected devices and machines, increased automation and a rapid development in new applications to enable automation. Payment technology in particular could evolve rapidly with 5G, even penetrating the wearable market. It will have a significant impact and is worth watching closely.
Smart data discovery
According to research analyst firm Gartner, smart data discovery will accelerate business intelligence capabilities and enable a new generation of data-driven decision making. For banks, this will mean a more accurate understanding of their customers, but also the ability for all employees, not just data scientists to make sense of the data.
Big data will continue to evolve rapidly and the ability to understand that data and react accordingly will ultimately determine the success or failure of an organisation.