As we approach the end of 2017, it’s clear that banks are all too aware that digital transformation is a priority and they are embracing technologies like blockchain, artificial intelligence and chatbots in a bid to reinvent themselves and re-establish the engagement with their digital-first customers. Incumbent challenges like legacy systems, cyber security threats and a less zealous regulatory environment, have not stopped banks investing in their future and an optimistic economy has provided a profit boost for the banking industry. Ever demanding customers continue to reshape the industry’s landscape, and continual improvement and innovation remain key differentiators in an increasingly saturated banking market that has long become commoditized.
1. From Bank’s to Banking – Open Banking comes of Age
For many years there has been talk of how “Open Banking”, “OpenAPI’s” and “Banking as A Service” will disrupt and drive a new model for digital banking services. In simple terms, banks will allow each other (and authorized fintech startups), to have access to their customer’s account transaction data with full read and write functionality. It is on this theoretical basis that companies like Google, Apple and Facebook are expected to transform banking as we know it, without having to become ‘banks’ themselves. Many financial institutions have already preempted this potential threat by launching their own Open API programs (See here for a few: BBVA, Citi, Capital One), and elsewhere we have seen the birth of challengers like Starling Bank that look to compete with incumbents by embracing the API partnership model to offer their customers innovative and feature rich services without having to develop everything themselves. As the fintech startup ecosystem develops and matures in 2018, there is likely to be clear indicators of those who are doing well, and it would not be surprising to see banks acquire many of these startups, and leverage their ability to target ‘switchers’ and increase wallet share. Click Here to read the full article.