As the new year approaches, the time has come to reflect on the developments that shaped the retail banking landscape in 2018 and look ahead to the next twelve months.

A year ago, I predicted that in 2018 migration to the cloud would rapidly accelerate, DLT applications would come to fruition, open banking would improve the relationship between banks and customers and cyber resilience would strengthen in response to the increasing risk of attacks. This year, we will see the continuation of some of these trends along with some new additions.

As such, the six defining technologies I expect to shape the way retail banking functions in 2019 are as follows:

1. Artificial Intelligence and the Internet of Things (IoT): AI-driven applications will continue to gain traction across all banking segments. In the payments space, there has been significant hype around AI’s potential for fraud detection with supporters advocating that it will be able to prevent misconduct before it happens. The industry has already seen AI facilitate operational and cost efficiencies through chatbots reducing the need for human agents in customer service, for example. Additionally, IoT will strengthen banks’ customer loyalty by enabling banks to personalise products and services such as mortgage offers, which is key in the era of open banking where customers can switch between competitors with unprecedented ease. We can expect to see tangible use-cases such as these increase over the coming year.
2. Distributed Ledger Technology (DLT) becomes mainstream: While the application of blockchain in retail banking has failed to take off as quickly as the industry had initially anticipated, the realisation of DLT-based solutions is imminent. The technology will be particularly useful to corporate treasury departments for trade finance and data management, as well as for keeping track of and facilitating loans, which the industry recently witnessed through BBVA signing the terms of a $150 million syndicated loan using DLT. These types of applications will begin to move into the mainstream next year as banks learn to overcome the technology’s scalability and privacy challenges.
3. Open Banking takes centre stage: Last year I rightly predicted that ‘open banking, open doors’ would become the mantra of 2018, as seen in the increased transparency for financial products and innovation seen by the industry. While these initiatives have been instigated by challenger banks and incumbents alike, innovation by established banks that benefit from higher customer trust and loyalty has gained most traction over the past year. Barclays, for example, introduced an open banking feature to its core mobile banking app to allow customers to view accounts from competitor providers in one place. In 2019, we will see more established providers deploying open banking apps and collaborating with fintechs to bring these to market. 
4. Innovation in security: I expect to see continued innovation in the security space, especially around identity and facial recognition. Mobile banking apps are most likely to leverage this technology using a tiered recognition process: the higher value the transaction, the more complex the recognition process will be. Voice recognition will also continue to transform retail banking; we have seen its application more broadly with services such as Amazon’s Alexa however it will gather speed to allow customers to block bank cards, check balances and even make transactions. 
5. Cloud migration to radically change the cyber landscape: Over the past year, we have seen banks increasingly adopt cloud solutions in a trend that shows no sign of slowing down. In contrast to the security concerns that previously dominated industry discourse, migrating legacy systems onto the cloud is now seen to render systems more resilient if architected correctly as it reduces the risks of a single point of failure. The risk of cyberattack is ever present and complex, however cloud is no longer seen as a risky option but a way of overcoming the challenges posed by malicious actors, which will further drive adoption over the coming year. 
6. SD-WAN: In 2015, Gartner predicted that 30% of enterprises will have deployed SD-WAN in their branches by the end of 2019. Nearly four years later, we are seeing the demand for this service increase significantly due to the central governance it brings to firms with a patchwork of different networks through the overlay of a single infrastructure, providing choice and agility through enhanced visibility and traffic prioritisation. This is particularly pertinent in light of increased cloud migration, as firms often occupy hybrid environments. In 2019, I expect to see SD-WAN adoption increase as businesses strive to keep pace with developments in cloud technology.

Ultimately, digital transformation will continue to be the dominant business incentive for retail banks, with disruption presenting both an opportunity and a threat. Some banks are reticent to pursue digital transformation due to the risk of failure. However, failing to innovate and being a digital laggard can do even more damage. In this digital age, staying ahead of the curve is a key differentiator as banks compete in an increasingly competitive landscape.