After bartering, the bank branch and digital financial services, Subbaraman highlights that the cogs for the fourth generation of financial services have been set in motion with open banking and the establishment of an ecosystem where a third-party provider has access to customer data. The consumer now also has control over their personal information and banks in this area are being disrupted.

“The modern world of banking is moving towards a digital, consumer-oriented approach. Developers today are building user-friendly financial apps based on what they see around them, such as how consumers interact with apps such as Uber or Apple Pay. Areas like payments, cards and loans are ripe for disruption - and don’t require core banking experience.

“Any developer can work on an app that improves the user experience for a particular process and connect to the underlying platform through open APIs. This doesn’t require deep financial industry expertise or experience,” Subbaraman says. For the developer, open APIs are opening a vast range of opportunities to apply their underlying technical skills to financial services and Subbaraman claims that creating a financial app allows a developer to monetise their ideas.

Despite the limitless opportunities, there have only been a few standout examples of impactful mobile payment application successes such as mPesa, which Subbaraman puts down to different generations of technology. He explains that while mPesa was built to use SMS and GPRS networks, the “confluence of 3G and 4G networks, the accessibility of Android and iOS devices and geolocation functions, have been a game changer, particularly in areas like payments.”

While mPesa has made significant moves and set the standard when it comes to innovative, inclusive payment methods, there is so much more to be done and can be done to remedy issues that permeate this industry. Subbaraman believes the fifth generation of banking will be heralded by a focus on data and artificial intelligence.

“The reason for this is simple: we have the technology and the capability for predictive AI-based thinking, but the question of who controls the data still stands. Will it be the end-consumer, the bank or a third-party governing body?” Subbaraman asks.

He continues to say that as “consumers start to understand how their data is being used, there is the risk of a potential backlash from consumers who want to have tighter control over their own data. With this in mind, it’s imperative that banks educate customers on the merits of sharing data and the benefits it can provide in terms of a more personalised experience.”

Today, the industry has reached a point where the convergence of technology, regulation and data privacy has the potential to shape financial services of the future and it is evident that banking will be hyper-personalised as a result of artificial intelligence and data analytics. However, not all countries are taking this route and economic leaders could stand to learn from developing countries.

Subbaraman points out that while Asian superapps work well in emerging markets, “in developed markets, there is a fear from regulators and consumers of the amount of control a firm can have on a consumer’s life. This can be reflected in how Europe is starting to regulate Big Tech firms such as Google. We may also start to see some backlash against Amazon and other Big Tech firms in the US.”

To stifle consumer concern, it is important for banks and financial institutions to provide data control, educate them on the benefits of sharing data anonymously and be given the choice to do so. Subbaraman concludes that “consumers’ knowledge of data control is getting better. People are following data privacy issues such as what happened with Facebook and Cambridge Analytica around the US election. The EU’s GDPR regulation is certainly taking a step in the right direction in this regard, which is educating the modern consumer on the control they have over their data.”