Big fintech year behind, even bigger ahead!
2015 was a big year in banking technology, with new technologies and disruptive entrants to the market changing the way financial transactions are conducted for good.
Among the big launches that have been shaking things up are challenger banks, such as Atom Bank, that have attempted to re-write the long-established retail banking rulebook with mobile-only banking for customers.
On the payments front, Apple launched the much anticipated Apple Pay, with Samsung and Google following suit soon after. We've also seen the use of contactless payments skyrocket, with the UK Cards Association citing that one in ten card transactions are now contactless.
Perhaps most notably, in the past 12 months we have witnessed blockchain's evolution from an obscure back office technology into the buzzword of the industry. It is now widely acknowledged that the technology has the potential to save millions in settlement costs and a number of established global banks, including Barclays, Royal Bank of Scotland and UBS, have started exploring the application of the technology for their cross-border payments.
So what are the hot developments that are set to shape 2016? If the start of the year is anything to go by, blockchain is going to continue to generate excitement, for several reasons.
Blockchain's underlying technology — distributed ledger — leaves little room for abuse and could help improve trust among the parties involved in a transaction. What's more, in by-passing a central ledger, costs can be lowered. Banks, governments, innovators and institutions cannot help but sit up and take notice. Indeed, BT's has a dedicated research programme looking at this.
Big data is another area that we expect to remain on everyone's mind this year. Despite the loud buzz surrounding the concept, only now are most banks really starting to explore it. Times are changing though and this year we expect banks to begin using their customer data in more sophisticated ways. For example, improved customer profiling will enable banks to make better lending decisions in real time.
With the increased use of mobile and digital technology, we find a growing desire for an 'omnichannel' banking world — that is, a seamless banking experience that caters to whatever situation the customer finds themselves in. With this, we will see banks working with partners who can help make their products more contextualised, using creative tools and technology such as SMS or smartphone apps that will help them communicate with their clients in a particular time zone, on a specific day and at the right time (so as to not contact them while driving, for example). Application of these different parameters will help banks to communicate in a more efficient way, knowing when the clients will be most receptive to the information banks are trying to convey.
But while retail banking becomes more digital and mobile, the branch remains important and complementary component in the omnichannel experience. Far from seeing their demise, we are likely to witness the evolution of their role. We see bank branches embracing technology that is ever more service-oriented and visually appealing, with high tech gadgets for self-service working side by side with much valued on-site human support. Investment in this technology could pay dividends in growing customer loyalty, deepening relationships and growing profits.
There's no doubt that the digital banking momentum achieved in 2015 will gather pace in 2016. Digital-only players will continue to come to the market, both in banking and insurance, and we look forward to seeing how the larger established banks shape their digital strategies in response.