Yahoo Finance 12 trends that will shake Australian banking in 2019
In the post-Royal Commission era, it seems that no area of banking and finance is exempt from potential regulatory reform.
In such an environment, business models are being shaken up. At the very same time, new technologies are coming into the mix, throwing up questions of privacy, security and ethics.
In light of such rapid change, global IT consulting firm Infosys has identified six tech trends and six business trends that will redefine the rules of the game in banking and finance this year:
1. The architecture of banking will change. Essentially, technological infrastructure will be built around business focus, with a focus on allowing for the integration of new technologies in the future and designed for collaboration, automation, open-source technologies, and analytics.
2. AI will be scaled up. The two-letter acronym that was on the tip of everyone’s tongue in 2018 isn’t going anywhere this year: in fact, we’ll see more of it. Artificial intelligence will seep into every aspect of banking enterprises, from customer support, to marketing, compliance, identity management/authentication, and even talent management.
3. Greater adoption of blockchain. If 2018 was a year of experimentation with the distributed ledger technology, 2019 will see significant commercial adoption of blockchain across trade finance, supply chain finance, as well as retail and corporate banking.
“Enterprises seem to have grasped the implications of Blockchain and will seek to not only save cost but also generate revenue from it,” the report said. “There is particular interest in blockchain as a single source of truth, tokenisation, smart contracts and automation capabilities.”
4. Banks will move towards the cloud. More banking enterprises will migrate to the public cloud as workloads increase and cloud services mature. Cloud adoption will be driven by the demand for seamless integration with fintechs and third party providers as well as open banking.
5. Banking will become invisible. 2018 saw a number of the major banks integrate a number of banking services with their voice-activated devices, allowing for customers to check their bank balance and transactions with Amazon Alexa. The future will see more seamless, invisible integration of this kind as ‘banking at home’ takes off as well as Barclaycard’s ‘Dine & Dash’ concept of sending a customer’s bill to their phone, allowing them to walk out without waiting to pay.
6. Virtual reality will be explored in banking. Mixed reality is still at the nascent stage for banks, with some pilot projects starting to come into the fore, but expect this to become a growing trend in time.
“Watch out for new use cases in the coming twelve months,” the report said. “In banking, these will primarily be about enabling immersive customer experiences. Banks will have virtual branches where customers can transact using smart devices.”
7. The ‘vertical integration’ model will fall out of favour. Banks manufacture and sell their own products – but this is giving way to a “platform business model”, where banks bring in non-financial offerings as well as competing financial products into the fold.
8. Customer journeys will begin from intent. The customer experience is being reimagined, with customer journeys to become more fluid and frictionless. Various technologies will come into the mix too, such as artificial intelligence and virtual reality, to make customer service more personalised and dynamic.
9. Open banking will hit Australia. New windows of opportunity will open for big banks as well as mid-tier and smaller institutions to augment and enrich their offerings and value propositions.
10. Both cybersecurity and hacker attacks will evolve. Artificial intelligence and machine learning will be harnessed in more sophisticated cyber attacks. “As enterprises switch to these
technologies, so will hackers,” the report said. For example, AI solutions such as chatbots will be exploited to influence behaviour. Hackers will be upping their game, and banks will have to redouble efforts to step up their counterattacks.
11. A more diverse workforce. Banks will need new skillsets ranging from cyber-security professionals, AI specialists and automation experts. The challenge will come from attracting and retaining talent, and the need to adapt their culture for the influx of gen Zs and millennials that will be entering the workforce, as well as the gig economy.
12. Data privacy and ethics will become more important. Banks have long been viewed as custodians of customer data, but changes such as open banking will open up risks associated with data sharing. “2019 will see banks beginning to walk the tightrope between sharing data to foster innovation and protecting data to save customer’s interest,” the report said.
So what will set banks apart? How they hold to their ethics.
“Demonstrating strong ethical data practices will be integral to building an organisation’s character, which alone will generate customer trust amidst rapidly increasing threats and breaches.
“Privacy and ethics will not just be a compliance requirement, but a competitive differentiator in 2019 and beyond.”
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.
Now read: Why Australian startups are in trouble in 2019
Now read: Australia meets ASX200 boardroom diversity targets – WITHOUT quotas
