The coronavirus crisis has completely focused banks’ attention on new technological challenges. Bank branch visits were declining even before the pandemic, and under isolation conditions, this trend only intensified. “Banks have spent years building systems for recovery after technological failures, but they didn’t foresee a recovery scenario for when they lose access to their offices. This is a major lesson of the current crisis,” says leading global fintech influencer Chris Skinner.<\/p>\n
Quarantine will accelerate banking digitalization. According to The Economist Intelligence Unit survey, 45% of banks call building a “truly digital ecosystem” their strategic response to this challenge.<\/p>\n
66% of The Economist Intelligence Unit survey participants believe that new technologies (artificial intelligence, machine learning, blockchain, Internet of Things) will have the greatest impact on banking sector development in the next 5 years.<\/p>\n
Banks consider regulation of digital operations, particularly data protection, as the second most important trend \u2013 42% of respondents named this trend among the main ones. New regulations could become a key factor in open banking development in individual regions. They may also allow new non-traditional players into the financial market, which will also significantly change the market landscape.<\/p>\n
50% of surveyed bankers believe that competition between banks and modern payment systems like PayPal and Apple Pay will intensify in the next 5 years. 34% of respondents see such a threat from technology giants like Google, Facebook, and Alibaba. Significantly fewer respondents \u2013 20% \u2013 fear competition from neobanks, as they have not yet managed to build deposit and credit portfolios to a significant level. Some challenger banks are now changing their strategy from providing financial products directly to selling their expertise to traditional banks with stronger brands, broader reach, and more substantial capital.<\/p>\n
Meanwhile, 84% of survey participants believe that fintech startups will have efficiency advantages over traditional banks. More than a quarter of bankers (26%) see fintech investments as a priority of their innovation strategy.<\/p>\n
59% of respondents agree that the traditional branch-based banking model will completely disappear by 2025. A year ago, 44% of bankers held this opinion.<\/p>\n
Which digital areas do bankers plan to invest money in over the next 5 years? For many of them, technology investments primarily mean cybersecurity expenses (35%), reflecting widespread concern about possible data breaches. 33% of respondents mention developing artificial intelligence platforms (digital and voice assistants), 27% mention cloud technologies.<\/p>\n
Artificial intelligence will undoubtedly play a central role in the digital shift: 77% of respondents agree that the ability to derive value from AI will become a key differentiator between winning and losing banks.<\/p>\n
An overwhelming majority of respondents (83%) believe that Platonization of banking and other services through a single entry point will drive the market forward. This pushes banks toward transforming existing business models into true digital ecosystems, according to 45% of respondents.<\/p>\n
Banks place great importance on artificial intelligence in their planned investments, but the problem is that most of them view AI as a tool for closing the “last mile,” ignoring its advantages in other links of the value creation chain: productivity enhancement, customer retention, and monitoring functions.<\/p>\n
Bank customers are concerned about how exactly artificial intelligence technologies will use their data and how safe this is. 34% of respondents expressed concern about the lack of clarity around data use, 40% are unsure about the security of their personal financial information.<\/p>\n
The number of banks expecting artificial intelligence to create new business opportunities is growing. “As investment algorithms become more advanced, they will be more widely used in portfolio management,” explains Nick Dreckmann, Chief Operating Officer of Julius Baer Bank.<\/p>\n
According to bankers, to improve customer experience, they need to expand the use of artificial intelligence for fraud detection (16%) and back-office functions (8%). This will likely be reflected in future business plans. According to HSBC Chief Operating Officer Anil Venturupalli, artificial intelligence is already integrated into HSBC’s back-office processes.<\/p>\n","protected":false},"excerpt":{"rendered":"
In February-March 2020, The Economist Intelligence Unit conducted a large-scale study, surveying over 300 top bank executives worldwide. The goal of the research was to determine which key trends and technologies will shape the face of banking in the next 5 years.<\/p>\n","protected":false},"featured_media":45943,"template":"","meta":{"pmpro_default_level":"","tdm_status":"","tdm_grid_status":""},"product_brand":[],"product_cat":[2355,2347],"product_tag":[3475,2349],"class_list":["post-76148","product","type-product","status-publish","has-post-thumbnail","product_cat-digital-banking-en","product_cat-study-library","product_tag-2016-2020","product_tag-the-economist-intelligence","pmpro-has-access","first","instock","shipping-taxable","product-type-external"],"yoast_head":"\n