In the past year, we’ve seen technology play a huge part in shaping the banking industry landscape, from emerging fintechs to new solutions facilitated by Open Banking to the latest AI tools. With such progression happening throughout the sector, we are sure to see more disruptive trends emerge in the new year. So, what can we expect?

Challengers vie to stand out

A large number of fintechs only have a limited set of financial products to offer which somewhat limits their potential to grow. To compensate, some fintechs will act to expand their variety of products and carve out their USPs in order to keep their existing customers engaged whilst sparking the interest of potential new customers. Not only will this keep disruption continuing, but it will also help to strengthen their revenue growth. However, a likely setback limiting their ambitions will be that their balance sheets will need to be significantly larger before they can offer new products, especially when it comes to borrowing and investing.

Overseas operating centres face the chop

15 years ago, outsourcing was seen as a major way of reducing your cost base. However, the rapid increase of AI and machine learning has resulted in banks being able to reduce the number of operations or service centre staff as they embrace the power of automation. Automation has also resulted in banks not needing as many staff, making it more affordable for them to be brought back to the UK. This will benefit the organisation as it will bring employees closer to the head office, their colleagues and importantly the customer, eliminating friction costs that are derived from management and colleagues being far away, or even time differences.

Rise of the micro advisory-focused branch

Lending and investment advice are activities traditionally carried out via a face-to-face interaction. However, with the continued rapid closure of numerous bank branches, this activity will be harder to come by for banking customers. In order for banks to offer advisory services moving forward, we will start to see the opening up of micro-branches all over the country. These outlets will offer private zones for advisory, and staff dedicated to educating customers about their products and how to better use online banking services.

Say hello to virtual bank advisors

A consequence of branches becoming education and financial advisory centric, will be the challenge of delivering a service to customers that are too complex to be undertaken via an online service e.g. a chatbot. As time is of the essence for many people, they will not be willing to wait until the correct staff member is available to speak with them. Instead banks must serve their customers remotely on a greater scale. To do so, they will invest in the latest communications technology, which will allow specialists to give financial advice virtually, as well as online booking for appointments in branch or at home or the office.

Changing business model structures

Banks have started to think more about their strategies for how they should operate best in an Open Banking world. Not only does this derive from banks shifting their technology to the cloud, on-going re-platforming, but they have also faced pressure from customer and regulatory demands. For 2020, banks will realise that they need to be organised in three key technology areas: product, pricing and data. This will also affect the structure of the organisation; by trying to minimise silos and assess how technology can be used to support the new business opportunities while removing threats.

For the banking sector, technology is a key differentiator, but so far, its capabilities have only been touched upon. Over the next twelve months those that invest in the right tools that can both improve customer experience and save the organisation money are the ones who will pip their competitors to the post.