In Focus Collections
‘Banking will be personalised to individuals’
Banks will need to strike a balance between technology innovation and risk mitigation
Josh Bottomley Global head of digital, data, and development, HSBC
Technology and data advances will enable banks to provide customers with a hyper- personalised largely automated service within the next decade, replacing the traditional retail products-based approach. But the extent of the evolution of this
‘banking of the future’ model will be dependent on banks’ ability to find the right balance between innovation and risk management. According to a new report, Banking of the
Future, Finance in the Digital Age, written by financial technology expert Professor Markos Zachariadis for HSBC, customers will start to take much more control of their own personal data through digital ID profiles. At the same time, banks will aim to
become ‘trust brokers’ in the management, development, and safeguarding of these digital IDs – and access to third-party services outside financial services, like utilities and retailers.
By mastering new data sources and
analytical technologies, banks can build up a deeper understanding of customers’ needs – and how they can help them – as well as unlocking new revenue streams.
The next decade Within a decade, this could lead to banking becoming largely frictionless for consumers. Instead of assessing each product category
individually, like savings, borrowing, and investment, to find the best option, they will be optimised in the background based on a customer’s data profile. Digital voice activation will likely
become the default channel for customer communication, along with augmented reality in real-life situations, with the option to speak to a human advisor for more complex problem solving. However, managing risks which are
growing in the new digital economy, like data privacy and cybersecurity, will be essential to the development of this future system and building consumer trust. For example, further steps need to be taken
Financial services has traditionally been slower to digitalise than other industries, but we are now seeing a real period of change, and there will be a number of significant opportunities for successful banks over the next decade
to standardise work in artificial intelligence, how information is collected, presented, and explained to consumers. Much greater international coordination
will be required to truly take advantage of new technologies – which are by and large borderless – to avoid regulatory arbitrage.
Journey to future banking The journey towards banking of the future will accelerate considerably over the next decade. Customers can expect a highly- personalised service determined by their
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individual requirements, instead of being based around a set of savings, borrowing and investment products – each with their own sales and servicing characteristics. But for this to become a reality, banks
will need to strike the right balance between what technology and data can enable to meet customers’ expectations, with the need to actively address risks to their well- being, as well as protecting the financial system.
Period of change “Financial services has traditionally been slower to digitalise than other industries, but we are now seeing a real period of change, and there will be a number of significant opportunities for successful banks over the next decade. “By leveraging technology to better
organise and analyse the data, as well as using their trusted position to build a closer relationship with consumers, banks could expand their role at the centre of a more platform-based financial services model,” said Professor Zachariadis, author of the report and professor of financial technologies and information systems at Alliance Manchester Business School. The report explores three key areas and
the likely developments over the next 10 years
Technology & Data Enablement l Distributed ledger technology could play an increased role in platform-mediated distribution in financial services. l Partnerships between fintech firms and banks will most likely increase exponentially.
January 2020
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