The mission in financial services today is driven by the need to improve customer engagement in selling, delivering, and servicing financial products, payments, and services. Included in this mission is the need for some financial service firms to improve their “brand trust,” providing their customers with a more transparent and secure environment. While some of this will be driven by internal strategy, much of it will be dictated through regulation and guidance. Driving all this is a concept called “connected banking,” which is forcing the industry to disrupt its own business model by connecting to adjacent markets in order to expand the relationship with its customers and provide an experience that is being shaped by industries outside of financial services.
The 10 predictions from IDC’s inaugural corporate banking study are reflective of a major change underway in the sector as digitalization and internal DX escalate, while cognitive, connective, and analytical technologies develop in cloud, AI, and DLT fields. Meanwhile, the open banking and API trend promises new front-end, data-centric tools in the pricing of loans, trade finance, instant-payment route analytics, liquidity alerts, and so on, plus new services and market entrants. The pace of change will reach an inflection point in the next five years.
The ‘Open Banking Revolution’, triggered by the second Payment Services Directive (PSD2), will see new, API-connected services brought to European consumers around the traditional core financial services, creating a more holistic banking experience. It is not just the regulation that is pushing banks to deliver customer-centric products and services. It is also the changing customer attitudes in the way they engage with their banks. It won’t be surprising if insurers are faced with a similar regulation or challenged by competitors influenced by the disruptions in banking sector.