The top banking trends in 2016
Authored by: David Horton, Synechron Digital
As we take a look back at 2015, we can see that the banking industry as a whole, finally began its journey towards digital transformation. In UK, a force has awoken and the battle with Silicon Valley for Fintech leadership is a topic of many discussions. ‘Downloadable’ banks like Atom, Number26, Moven and Fidor continue to challenge the incumbent model and there are small signs that the seismic shift to 21st century banking has begun. If 2015 represented the year of designing and planning your digital strategy, it would seem that 2016 will be the year of implementing it.
In as far as self-led disruption goes, for many bankers the word ‘Blockchain’ will no longer be a concept buzzword discussed in the board room, and will now become a key project deliverable with very tangible results. Expect to see a battle for cross-border FX transfer supremacy, and talk of how the trade finance industry will move towards the digitization of the bill of lading. The ‘smart contract’ will be the new buzzwords for bank executives, and companies like Ripple and Ethereum will frequently pop up in discussions. Blockchain will continue to dominate discussions throughout 2016 and expect to see a new wave of fintech startups that gain funding through bank accelerators and incubation vehicles, and command impressive valuations. For those bankers looking to understand the Blockchain better, and in particular what it will mean to their organization, they should purchase the new book by Chris Skinner called ‘ValueWeb’ which should be out around March 2016. click here
Data and Analytics
Fundamental to the success of SPA is machine learning, an important new alternative to scripting if/then rules. Think about the document process referred to earlier. Even processing a very simple document like an invoice involves a lot of decisions – does the invoice meet requirements? Has it been approved? What type of invoice is it? Machine learning combines cloud, big data and AI technologies to learn and improve by creating models and refining models.
Robo-advisors, Machine Learning & Algorithms
In the wealth management, private banking and high net worth space, investment banks will look to embrace ‘digital’ and offer new solutions for managing and monitoring their clients’ portfolios. For many of these organizations, the journey towards building a truly digital bank will begin by building one from scratch. In 2015, many large banks have already announced their intentions to do this and this looks to be a growing trend for those goliath banks struggling to transform themselves, and overcome ingrained and old-fashioned policies, change resistance and incapable legacy systems. My simple advice to banks is that building a digital bank as a greenfield project will probably cost a little more in the short term, but agility and survival are two great incentives that may justify the decision. Elsewhere in the wealth management technology domain, customers can also expect to be given professional tools like robo-advisors to empower self-service of their portfolio management, and help develop personal investment strategies that allow you to ‘follow the leader’ in portfolio performance. Banks will be able to determine your persona and allow you to financially compare yourself with others who have similar income and lifestyles. In 2016, the evolution of machine learning and automated trading algorithms will begin to show compelling results that will make these technologies hard to ignore and those banks who have not invested in this area will do well to reconsider such decisions.