There are many pundits predicting change in banking and FinTech this year. Here’s a review of a few of the ones that have some depth.
American Banker published seven FinTech predictions for 2019 by Bob Legters, Chief Product Officer of Banking and Payments at FIS. The seven headlines are:
- We won’t see the end of cash, but points and loyalty will become more of a currency
- We won’t see the end of plastic, but the industry will move in that direction, especially with contactless technology
- 2019 will not be the year for blockchain and crypto, but it will be a year for AI and machine learning
- Smaller banks’ digital capability won’t reach that of the big banks, but open banking and other disruptive technology will help narrow the gap
- Data breaches won’t let up, but we will see crucial developments in authentication and combating fraud
- Banks won’t become branchless, but they will get more creative with their real estate
- We won’t get to the holy grail of real-time payments across the entire financial ecosystem, but we will make great strides in that direction
These points are payments oriented – bear in mind Bob’s background – and I agree with them generally, although some are headlines from earlier years. For example, number three about AI not blockchain was my 2018 headline. I’m also not sure that contactless getting rid of plastic is accurate. I keep my plastic and use it as a contactless card. It’s more likely that QR codes will get rid of plastic, as I hear that Visa and MasterCard have finally heard of China’s Alipay and WeChat Pay and want to imitate their QR-code payment systems. That’s not in 2019, but it is a mark in the sand for the future.
11FS have some strident views around 2019, with a few key trending areas as follows:
- Open Banking…part deux: 2019 will be the year when APIs start to make a difference
- The Empire is Striking Back: banks will retaliate against the FinTech threats
- The GAFA side shadow: you should worry about them
- SMB’s get some real love: small business banking is a real opportunity area
- Starling and Monzo are the breakaway winners in the challenger bank arena, but can they keep it up?
- Big Data Will Change Everything
- Personalized Experiences Will Be The New Norm
- APIs Everywhere
- GAFA To Become Retail Banks
- Blockchain Will Change Everything
- Amazon Shall Take Unprecedented Scale
- Cloud Will Become Omnipresent
- Machines To Start Taking Our Jobs
- Voice To Replace Everything
- X (FinTech, Bitcoin, IPOs, etc) will collapse/disappear
Interesting thoughts, and many of the statements above I’ve been hearing for years. Take Number 2. I used to work for NCR who, back in the 1990s, expounded the theories of Don Peppers and Martha Rogers around the segment of one. Twenty years later, we’re still talking the same thing.
Jim Marous over at The Financial Brand published three predictive articles for 2019, summarising a range of other perspectives in a similar way to my summarising here.
The first gives nine trends affecting marketing to the digital user. These are more societal changes and include:
- Social Media’s Growing Impact
- Need for Speed
- Real-Time Research Changes the Customer Journey
- Demand for Value in Exchange for Personally Identifiable Information
- Desire for Humanized Digital Experiences
- Growing Importance of Images and Voice
- Desire for Life Balance and Experiences
- Need for Privacy and Security
- Increase in Social Activism
Point nine I touched upon yesterday in my blog about the year of witty protest. Funnily enough, I was also thinking about point six – the importance of image and voice – as I used to work a long, long time ago for a firm called Wang Computers. Dr. An Wang was the visionary behind that now, long dead company. His vision was to embrace key technologies to manage data, text, voice and image. That was a strategy he instigated back in the early last century. It’s still as important today as it was way back then.
The second of Jim’s three articles talks about five key New Year’s Resolutions for banks that want to become truly digital. There include:
- Use Data and Advanced Analytics Universally
- Digitize Account Opening and Onboarding Processes
- Create and Support an Innovative Culture
- Embrace Open Banking APIs
- Collaborate With Fintech Firms
Funnily enough, I’d say that Number 3 on that list is the only one worth focusing upon. If you achieve a digital bank culture, the rest will follow through naturally. The issue is changing the culture however, and that has to start at the top. Rarely am I seeing a truly digital culture being developed. I hear the talk, but I don’t see the management walking the walk. We shall see what happens in 2019.
Jim obviously likes lists with five things on them as the third article he published talks about five Innovation Trends of 2019. These are:
- Serving a Segment of One
- Expansion of Open Banking
- Commitment to Phygital Delivery
- AI-Driven Predictive Banking
- Payments Everywhere
First, I should point out that these all relate to personal banking; second, that the point about a segment of one I covered above, in Duena’s round up; and third, phygital? Really? I’m never using that word. Anyways, worth a read if you want a better grounding in 2019 trends.
Building on Jim’s articles, I received a large number of emails offering predictions for 2019. I don’t generally respond to emails, but one stood out from Jamie Hutton, Chief Technology Officer at Quantexa, a company focused upon big data analytics and AI. His six 2019 forecast included:
- Widespread adoption of AI & machine learning: 2018 has seen a lot of hype around AI but in 2019 we will see AI & machine learning being adopted more widely across businesses large and small, especially as AI as a service and automated machine learning services available in the cloud dramatically reduce the barrier to entry
- Rise of conversational, or voice, banking: messaging applications and chatbots will become more widespread
- Developments in digital payment solutions and the fall in paper money
- Biometric technologies and blockchain: security will evolve to include this authentication to reduce fraud using fingerprints and eye scanners, as well as blockchain-enabled security for transfers
- Mass Cloud adoption: whilst the cloud is not new, its adoption by tier 1 organisations has been surprisingly low – often limited to third party services. 2019 will see a marked shift in the strategy, where large swathes of previously “on premise” and “core” technology will be moved into the cloud. Cloud adoption will be one of the key drivers behind the rise of AI and Machine Learning.
- Rise of Open Banking: this will result in greater financial transparency for account holders, and a rise in new payment technology
Anyways, there are many, many more predictive FinTech sites out there if the above is not enough.
My reflections on the above bubbled underneath some of my commentary.
First, it’s interesting that a decade ago, no one was really making annual forecasts of key trends in finance and technology. Today, everyone is, as this is a hot space.
Second, it’s a real indictment that some of this year’s forecasts were forecast twenty, thirty or even forty years ago. Dealing with customers through technology one-on-one as a segment of one; focusing more on the customer with a personalised touch; managing data in an organised way for leverage of knowledge; dealing with all forms of communication whether data, text, voice or image; organising to compete with the big tech firms; and so on and so forth have been headlines since almost the first day I joined this industry before most FinTech firms, and their founders, were born. Isn’t it time we took this seriously?
Third, I’m gratified to see the consistent mantra across all forecasts that cloud and open banking has finally arrived. Yes, it has. Everywhere? No. But it’s certainly going to make clear inroads into structures of finance in most markets in 2019. Watch that space.
Fourth, where is RegTech?
Oh and finally, you may be wondering why I haven’t talked about crypto in more depth. That’s because I’ll cover the specific predictions about the crypto marketplace tomorrow, as they deserve a separate, dedicated focus. See you then.