It’s interesting how trends rise. Over the past few years, I’ve been writing a lot about the impact of ESG and AI on banking, so it intrigued me to see a new survey of over 300 bankers about what’s new in banking. Key findings of the report include:
- Emerging innovations such as AI are cited as the most significant trend to impact banks in the next five years. 75% of respondents believe that the banking sector will be significantly impacted by generative AI and 71% agree that unlocking value from AI will be the key differentiator between winners and losers. This is reflected in investment priorities, with banks focused on tech innovation in AI and beefing up AI talent.
- The use of Cloud software is gaining maturity. More than half (51%) of survey respondents agree that banks will no longer own any data centres because they will have moved to public cloud in the next five years.
- 79% of executives expect banking to become embedded in consumers’ and businesses’ value chains, driving a shift in operating models towards developing a true digital ecosystem with banking and non-banking products and services. As such, banks are increasingly concerned about competition from technology and e-commerce disruptors, such as the likes of Apple Pay, especially in investments, international remittances and payment solutions, and are now less concerned about challengers.
- Therefore, banks are also doubling down on investments in areas such as improving personalised and embedded customer experiences and engagement – a top priority over the next five years – to improve the digital front-end customer experience.
- Focus on ESG: 73% of banks plan to offer more ESG and sustainable banking propositions to retail and enterprise customers in the next five years. 74% plan to provide capital to environmentally friendly project and 64% to take capital away from carbon-intensive industries.
The report, “Byte-sized banking: Can banks create a true ecosystem with embedded finance?” is available below:
It finds that payment companies, technology and e-commerce disruptors are competing against banks with embedded finance solutions. Coupled with consumers’ growing expectations for better, more personalized products and services, this is forcing banks to assess the role they play and how they must adapt.
Almost four-in-five of survey respondents agree that banking will become “embedded” in consumers’ lives and businesses’ value chains. One-in-five banks in the survey expect their business model to evolve in the coming years to offer banking-as-a-service (BaaS) to brands and fintechs and enabling embedded finance within their own products and services. Nearly twice as many want to retain the consumer-facing experience and act as a true digital ecosystem themselves.
It's nice to know that I’m not off the mark with my own thinking, which is all about the future of banking and, most recently AI, ESG and inclusion.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...