Technology Trends That Will Disrupt the Banking & Financial Services valuable information that is needed to stay competitive in the future. Digitalization is changing banking – These 3 trends will help shape its future · 1. New technologies will drive banking transformation over the next. Dissecting banking technology trends in · APIs making connections · Advanced Analytics, Machine Learning and AI · Fintech collaboration.
Future banking technology trends -
Email As a new decade begins, one of the major unresolved issues of the previous few years continues to haunt banks — when and how Big Tech will jump into financial services in a significant way. While Facebook has launched its Libra digital currency project and Google has begun partnering with Citigroup on checking accounts, these appear to be just the tip of the iceberg. Banking by could look very different from today. Many analysts expect this year to provide further insight into projects Big Tech has undertaken, including possible early leaks from pilot programs if results are positive, as well as the unveiling of new initiatives.
To be sure, it's not just Big Tech banks have to be worry about. Fintechs are continuing to make significant inroads into the banking system, particularly among younger millennials and Gen Z customers.
Following is a look at how some of these trends may play out over the next year. Tech companies drive deeper into banking Big tech companies, with their armies of top-notch developers and knack for creating convenient products, raised their profile in financial services in But that appears to be just the start of their efforts. Big tech companies, meanwhile, expanded their small-business lending efforts. Stripe launched its own working capital arm, Stripe Capital, in September. The Square Cash debit card is used by 3.
Square also has a Square Cash app for person-to-person payments. Uber is building a stable of financial services products for drivers and customers in its recently created Uber Money division. It already offers a bank account, debit card and mobile banking app through Green Dot.
Uber plans to let drivers automatically save a portion of each trip and create a holistic financial wellness app. Some tech companies have tipped their hand about their plans: Google plans to offer checking accounts to consumers through Citigroup and Stanford Federal Credit Union. Facebook plans to launch a cryptocurrency payment network next year based on a new digital asset, Libra.
Though Congress and regulators have slammed this effort, it should not be counted out. One potential obstacle to the large tech companies is a bill proposed in the House that would curb their financial services aspirations, called the Keep Big Tech Out Of Finance Act. Shopping cart on the screen. Banks and fintechs are getting closer, and expected to increase their efforts this year.
In , Huntington Bank rolled out Heads Up, artificial intelligence-based software that gives customers advice on saving, spending and achieving financial goals. Subscription payment alerts tell customers when they are being charged for a subscription or when a free trial may have ended. Other alerts notify customers when they may have been mistakenly double-charged by a merchant or restaurant.
Erica will then guide them through the process of filing a dispute when necessary. Not only does personal advice help cement a customer relationship, it can lead to greater sales. Such partnerships will multiply as other banks look to enter into the digital lending space in There are several online lenders that license their software to banks, including Kabbage and Upstart.
Blend, Figure Technologies and Amount, a spinoff of the fintech lender Avant, expect to increase the amount of banks they work with to provide better, and faster, digital lending options to consumers. Blend is expanding into auto loans, and working with BMO Harris Bank and others to improve the digital experience for home equity loans and deposit account opening products. Banks may need the help.
A recent Experian study found that digital lenders more than doubled their market share in the past four years, with consumers across the credit spectrum increasingly turning to digital-first providers. Two brown old boxing gloves hit together Ezio Gutzemberg - stock.
But as nonbank fintechs increasingly look to poach traditional banking clients, the language favored by some upstarts is again turning less charitable toward banks. Stein went further, arguing that banks' products "hurt America. Wealthfront additionally plans to begin offering mortgages this year. The industry should expect such tougher rhetoric as competition for savers and borrowers becomes fierce.
According to a survey of more than 1, U. Top bank executive themselves outlined in their forward-looking strategies how they would rebuff fintech challenges. One approach is to launch competing products.
The U. Another is a plan to outspend on innovation and tech. Office in Seattle, Washington, U. Data For years, there's been tension between banks and the fintech apps who need their customer data to function. A number of recent industry initiatives and partnerships aimed at standardizing data sharing practices seemed to suggest resolutions were near. But this year, a new front of open hostilities between banks and fintechs could emerge over data access.
A recent dispute between PNC Bank, PayPal and the data aggregator Plaid underline the points of contention, after some customers lost access to Venmo, a third-party payments app.
The bank says it discovered attempted fraud connected with data aggregators, and added new safeguards that prevent screen scraping, a method of obtaining customer data by getting permission to log in to their accounts and copy information. The bank also says its customers aren't clear what access they are actually agreeing to when ask for it using an app. The aggregator says that PNC has to improve its security. There's also the scuttlebutt that PNC blocked Venmo access to promote its competing Zelle service, an accusation the bank denies.
Other banks are taking similar stands. JPMorgan Chase plans to block fintechs that screen scrape too. JPMorgan, however, has data-sharing relationships with major aggregators like Plaid. Experts suggest that ultimately regulators will have to get involved to provide guidance that can settle these arguments.
Regulatory gantlet Challenger banks bulk up A number of challenger banks in the U. Chime and Varo [CEO Colin Walsh pictured above] each have plans to offer robo advice in , following a trend led by traditional banks in Additionally, Varo will issue credit cards once it is fully licensed, while also expanding upon its current lending options.
Newcomer HMBradley, which launches in Q1 with financial backing of PayPal and Affirm co-founder Max Levchin, has a plan to offer auto, home equity and other types of loans. Small bank may begin shifting to alternative core providers Discontent among small banks about their banking core provider seeded growth opportunities for alternative core fintechs. A handful of institutions are now investing in alternative core providers, and that number should be expected to only grow this year.
Other fintechs, including Mambu, Mbanq, Nymbus, and Temenos are carving out a space in the industry as a core provider to challenger banks, de novos, community banks and credit unions. The phenomenon won't impact the traditional providers anytime soon though. President Obama will speak on the importance of working hard, staying in school, and taking responsibility for their success. The group numbers nearly 60 million in the U. It's time for financial institutions to shift their marketing and product development focus to this generation, says Julia Carreon, managing director of digital and fiduciary operations at Wells Fargo.
Revamping outdated processes and exploring new digital avenues for communicating with customers, including video and virtual reality, are just some areas where banks can start, Carreon said.
Already, a number of fintechs are rolling out new apps and tools with the Gen Z user in mind, specifically built to help them either build credit histories while still in college, or allow for them to earn savings rewards for completing household chores. What makes Gen Z different from other generations, said Kalpesh Kapadia, CEO of the credit fintech Deserve, is that they are more fiscally conservative.
They want to avoid debt and appreciate accounts or services that help them stay financially sound, he added. In , Bloomberg News reported more than 50 lenders around the world had announced plans to cut a combined 77, jobs, the most since , according to filings by the companies and labor unions. Such reductions and expected efficiency gains through technology though pose a question: Can banks be thoughtful about digital change and blunt its impact on the workforce instead?
In fact, all its online banking services have seen activity increases. Christopher Maher, OceanFirst's president and chief executive, credits the strategy's success to converting and retraining bank employees for a digital-first reality.