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Top 10 Trends in Retail Banking: 2019

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Throughout the past decade, the banking industry has dramatically evolved. Aggressive competition and regulatory pressures have always been a challenge. Now, competition from FinTechs and non-financial services firms, an explosion of new technologies, and soaring customer expectations have spurred unprecedented industry changes that compel banks to develop new strategies. BigTechs with substantial customer bases (such as Google, Amazon, Facebook, Alibaba, and others) are venturing into retail banking and disrupting profitable areas of the value chain. With the BigTech threat looming, banks are embracing the open banking API-led economy and collaborating with third-parties to offer new-age services. Digital transformation enables banks to provide new and better products and services while controlling and reducing operational costs. Banks are adopting Distributed Ledger Technology (DLT) and artificial-intelligence-based voice assistants to improve efficiencies and customer experience. Similarly, data analytics, machine learning, and AI are being used to drive process improvements and seamless services. This analysis of the top-10 retail banking trends for 2019 aims to help readers understand the fast-changing dynamics of the banking ecosystem.

Published in: Technology
  • The banking industry gets more and more focused strategically and advanced technically. It’s no surprise that the main emphasis is being now put on business processes digitizing and structural reconsideration. The competition is great and everyone realizes that the future of banking is digital. To understand this issue some topics might help. Check: https://axisbits.com/blog/Digital-Trends-That-Will-Define-Banking-of-the-Future https://www.fintechfutures.com/2019/03/four-digital-and-traditional-trends-in-banking-in-2019/ https://www.youtube.com/watch?v=KBuQRYuMmcA https://blog.aimultiple.com/rpa/
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Top 10 Trends in Retail Banking: 2019

  1. 1. Top-10 Trends in Retail Banking: 2019 Capgemini, November 2018
  2. 2. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 2 10. Data Security and Compliance 8. Artificial Intelligence to Improve Customers’ Financial Lives 9. The Rise of Invisible Banking 5. Digital Banking Transformation 6. Distributed Ledger Technology 7. Voice Assistants – A New Channel for Banks 1. Bigtechs are Entering the Banking Space 2. Open Banking - APIs Set to Play a Key Role 3. Accelerated Path to Adopt Cloud Solutions 4. New-Age Operating and Business Models Open Bank Intelligent Bank Deep Customer Insights Data- Driven Compliance Top-10 Trends in Retail Banking: 2019
  3. 3. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 3 BigTechs Emerge as a Threat to Existing Banking Businesses Source: Capgemini Financial Services Analysis, 2018; Capgemini’s World Retail Banking Report 2018 45.8% Banking Executives perceive BigTechs as a disruptive force 37.5% Banking executives view BigTechs as contributor to banking ecosystem in 2020 Huge Existing Retail Customer Base Fully Digitized Operations Effective Data Utilization Leveraging Open APIs Advantages for BigTechs
  4. 4. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 4 Opportunities Promotes innovation and competitiveness in industry Banks may face increased disintermediation Enhanced scope of service offerings and better customer experience Data privacy and protection Personalized Offerings No standard frameworks in place APIs enable collaboration Banks would have to adjust their operating and business models Threats Open banking Gains Momentum, Provides Opportunity as well as Threats to Banks Source: Capgemini Financial Services Analysis, 2018
  5. 5. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 5 68% Shortage of skills 61% Significant cultural challenges 60% Integration with legacy systems 41% Require external support to choose right platform 88% Improved organizational agility 84% Revenue up, operating cost down 41% Allocation of cloud budget on PaaS in next three years 27% Cloud native is core part of overall cloud strategy Cloud Promises Major Gains but Not Without Challenges Note: Percentages indicate executives who had agreed with gains and challenges with cloud native approach Source: Capgemini Financial Services Analysis, 2018; Capgemini Perspectives: Cloud Native Comes of Age in Banking Gains with Cloud Native Approach Challenges with Cloud Native Approach
  6. 6. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 6 Changing Industry Dynamics Demand New-Age Operating and Business Models Monetize APIs through revenue sharing or usage based models Refining technology to support changes and growth in agile manner Drive revenues from non-banking services Expand scope of services through collaboration Automation of operations to enhance customer experience, save on cost Changes to Consider in Business and Operating Models Having increased focus on advisory in bank branches Source: Capgemini Financial Services Analysis, 2018
  7. 7. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 7 Banks are Accelerating Digital Transformation Efforts 95.8% Offering customers a better experience 75.0% Cost reduction measures (including automation, process streamlining, etc.) 58.3% Developing new products / revenue streams 90% Financial services firms who have commenced digital transformation activities Source: Capgemini Financial Services Analysis, 2018; Capgemini’s World Retail Banking Report 2018; Fujitsu, "'Digital Transformation of Banking Services' to Propose Future Banking Sector Business Models", July 12, 2018, http://www.fujitsu.com/global/about/resources/news/press-releases/2018/0712-02.html Banks’Driversfor Transformation(%),2018 30% Digital transformation activities that have yielded results Shift Towards Digital
  8. 8. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 8 Impact of Distributed Ledger Technology (DLT) on Banking Enhanced Transparency Higher Trust Quicker Transactions and Settlements Lower Transaction Costs Improved Operational Efficiencies Key Benefits Source: Capgemini Financial Services Analysis, 2018 Greater Reliability
  9. 9. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 9 Voice Assistants – A New Channel for Banks 145% Smart speaker installed base is forecasted to grow from 40.8 million in 2017 to 100 million in 2018 19.4% Users say they will use voice assistants instead of a mobile app or website, and this usage will increase to 30.9% in the next three years. 24.4% Users say they will use voice assistants instead of a visiting a shop or a branch, and this usage will increase to 40.2% in the next three years. Source: Capgemini Financial Services Analysis, 2018; Canalys Estimates and Forecasts, Smart Speaker Analysis, June 2018; Capgemini Financial Services Analysis, 2018; Capgemini Research Institute, Conversational Commerce Survey, October–November 2017, N = 5,041 consumers in the US, UK, France, and Germany A New Engagement Channel Key Benefits for Banks Deliver Personalized and Contextualized Services Conversation Ability to Build Human Empathy
  10. 10. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 10 Banks are Leveraging AI to Improve Customers’ Financial Lives Chatbots Source: Capgemini Financial Services Analysis, 2018; Autonomous Next, “Augmented Finance and Machine Intelligence,” https://next.autonomous.com/augmented-finance-machine-intelligence Artificial Intelligence Use Cases in Banking Anti-Fraud and Risk Credit Underwriting Voice Assistants KYC / AML Smart Contracts Infrastructure Authentication and Biometrics Monitoring Complex Legal and Compliance Workflows Front Office Middle Office Back Office More Mature Less Mature
  11. 11. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 11 Entering the Invisible Banking Age Source: Capgemini Financial Services Analysis, 2018 Drivers Implications Competition from non-traditional firms such as FinTechs and BigTechs Banking will become a seamless part of your customer’s lives New age platforms influencing customers expectations Banks need to efficiently utilize their data and build partnerships with third parties Need for a frictionless banking customer journey Ensure data security and privacy Proliferation of technologies such as analytics, voice-based conversation, and AI Human interaction and advice should not be ignored
  12. 12. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 12 New Business Models and Technologies Compel Bank Investment in Data Security, Compliance Source: Capgemini Financial Services Analysis, 2018; The Economist website, “Whose customer, are you? The reality of digital banking,” Renée Friedman, May 21, 2018, https://eiuperspectives.economist.com/financial- services/whose-customer-are-you-reality-digital-banking; Gemalto website, “More than 2.5 billion records stolen or compromised in 2017", April 11, 2018, https://www.gemalto.com/press/pages/more-than-2-5- billion-records-stolen-or-compromised-in-2017.aspx 21% Conforming to data protection and privacy regulation 19% Customer online security and fraud Biggest Challenge Bank Faces Concerning Data and Third-Party Access 71% Banking executives say cyber security is primary focus area of banks digital investments 88% In 2017, 2.6bn records were stolen, lost or exposed worldwide, around 88% increase from 2016 12% Industries such as healthcare (27%) and financial services (12%) experienced the largest breaches
  13. 13. A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2017 global revenues of EUR 12.8 billion. About Capgemini Learn more about us at www.capgemini.com This message contains information that may be privileged or confidential and is the property of the Capgemini Group. Copyright © 2018 Capgemini. All rights reserved. People matter, results count.

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