Banking
5 KEY THEMES THAT WILL TRANSFORM BANKING IN 2018

NCR recently surveyed over 1,000 UK adults, aged 16 and above, to gather their thoughts on the future of banking. Some of the findings are pivotal in understanding how banking will change in the UK in 2018 – with trends like AI, PSD2 and consumer trust shaping the transformation.
- Banking will transform to take on a personalised, responsive role in our lives
Self-service 24-hour ATMS, online banking, and video conferencing will continue to transform the way we bank. As a result, banks will be looking to offer new banking services for a digital age to meet growing demand for new innovations, with customers happy with their banks: helping them keep track of their spending (66%), offering loyalty programmes and reward schemes with retailers (75%), and reminding them about upcoming important recurring events like family birthdays or anniversaries (55%).
- Traditional banks are far from becoming obsolete, as many customers opt for reliable online banking from traditional providers over fresh and new fintechs
For nearly half of the population, whether a bank offers online banking is their top concern (44%), while selecting a neo-bank is low on consumer’s list of priorities. Reputation also remains highly important, with 35% of respondents rating it as a top three consideration. In contrast, over half (51%) decided that a bank being fresh and new was their least important criteria.
- Banks will be more transparent about how they are using customer data, as PSD2 opens up the potential for new third-party services
The appetite for data-driven service is strong, but consumers still have a lack of trust in their financial institutions. Banks will need to address these concerns to deliver the services consumers really want. At the moment, just short of half (47%) of consumers feel that banks should collect and use only the bare minimum of data. However, at the same time, almost a third (29%) of consumers want to bank using a digital assistant like Alexa or Siri, which will make third party integration and data sharing crucial.
- Telephone banking will become irrelevant, and banks will offer smarter, mobile-based, solutions far more advanced than currently available apps
Banking on the telephone is by far the least popular form of banking, with 86% never, or only once annually, using this service. Comparatively, nearly a third (30%) of the population bank from their tablet or mobile phone every single day, either online or via an app.
- Banks will be making use of new mobile-based technologies to interact with their customers – in particular biometrics and social media
Biometrics – and in particular fingerprint and iris recognition technology – are one of the most in-demand new technologies with nearly three quarters (73%) of UK consumers either already using the technology, or keen to use it in future. At the same time, there is great curiosity about the different ways banks could interact with their customers, with a quarter (26%) of consumers either currently using, or interested in using a chatbot on social media to talk to their bank.
Technology is changing customers’ expectations faster than ever before. In 2018, and beyond, banks of all sizes will need to step up to meet their customer’s expectations by seizing the opportunities that technology and regulatory changes like AI and PSD2 are bringing. This will be imperative to stand out in a highly competitive space, and prove to customers that they are capable of delivering the level of customer experience that today’s consumers expect.
Banking
ECB stays put but warns about surge in infections

By Balazs Koranyi and Francesco Canepa
FRANKFURT (Reuters) – The European Central Bank warned on Thursday that a new surge in COVID-19 infections poses risks to the euro zone’s recovery and reaffirmed its pledge to keep borrowing costs low to help the economy through the pandemic.
Having extended stimulus well into next year with a massive support package in December, ECB policymakers kept policy unchanged on Thursday, keen to let governments take over the task of keeping the euro zone economy afloat until normal business activity can resume.
But they warned about a new rise in infections and the ensuing restrictions to economic activity, saying they were prepared to provide even more support to the economy if needed.
“The renewed surge in coronavirus (COVID-19) infections and the restrictive and prolonged containment measures imposed in many euro area countries are disrupting economic activity,” ECB President Christine Lagarde said in her opening statement.
Fresh lockdowns, a slow start to vaccinations across the 19 countries that use the euro, and the currency’s strength will increase headwinds for exporters, challenging the ECB’s forecasts of a robust recovery starting in the second quarter.
Lagarde saluted the start of vaccinations as “an important milestone” despite “some difficulty” and said the latest data was still in line with the ECB’s forecasts.
She conceded that the strong euro, which hit a 2-1/2 year high against the dollar earlier this month, was putting a dampener on inflation and reaffirmed that the ECB would continue to monitor the exchange rate.
The euro has dropped 1% on a trade-weighted basis since the start of the year, but is up nearly 7% over the last 12 months. Against the U.S. dollar, that number rises to over 10%.
MORE STIMULUS?
Opening the door for more stimulus if needed, Lagarde confirmed the ECB would continue buying bonds until “it judges that the coronavirus crisis phase is over”.
Lagarde also kept a closely watched reference to “downside” risks facing the euro zone economy, which has been a reliable indicator that the ECB saw policy easing as more likely than tightening.
But she signalled those risks were less acute, in part thanks to the recent Brexit deal.
“The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging,” Lagarde said. “But the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk.”
Lagarde conceded that the immediate future was challenging but argued that should not impact the longer term.
“Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term,” Lagarde said.
Benign market indicators support Lagarde’s argument. Stocks are rising, interest rates are steady and government borrowing costs are trending lower, despite some political drama in Italy.
There is also around 1 trillion euros of untapped funds in the Pandemic Emergency Purchase Programme (PEPP) to back up her pledge to keep borrowing costs at record lows.
The ECB has indicated it may not even need it to use it all.
“If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full,” Lagarde said.
Recent economic history also favours the ECB. When most of the economy reopened last summer, activity rebounded more quickly than expected, indicating that firms were more resilient than had been feared.
Uncomfortably low inflation is set to remain a thorn in the ECB’s side for years to come, however, even if surging oil demand helps put upward pressure on prices in 2021.
With Thursday’s decision, the ECB’s benchmark deposit rate remained at minus 0.5% while the overall quota for bond purchases under PEPP was maintained at 1.85 trillion euros.
(Editing by Catherine Evans)
Banking
Bank of Japan lifts next year’s growth forecast, saves ammunition as virus risks linger

By Leika Kihara and Tetsushi Kajimoto
TOKYO (Reuters) – The Bank of Japan kept monetary policy steady on Thursday and upgraded its economic forecast for next fiscal year, but warned of escalating risks to the outlook as new coronavirus emergency measures threatened to derail a fragile recovery.
BOJ Governor Haruhiko Kuroda said the board also discussed the bank’s review of its policy tools due in March, though dropped few hints on what the outcome could be.
“Our review won’t focus just on addressing the side-effects of our policy. We need to make it more effective and agile,” Kuroda told a news conference.
As widely expected, the BOJ maintained its targets under yield curve control (YCC) at -0.1% for short-term interest rates and around 0% for 10-year bond yields.
In fresh quarterly projections, the BOJ upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic.
But it offered a bleaker view on consumption, warning that services spending will remain under “strong downward pressure” due to fresh state of emergency measures taken this month.
“Japan’s economy is picking up as a trend,” the BOJ said in the report, offering a slightly more nuanced view than last month when it said growth was “picking up.”
While Kuroda reiterated the BOJ’s readiness to ramp up stimulus further, he voiced hope robust exports and expected roll-outs of vaccines will brighten prospects for a recovery.
“I don’t think the risk of Japan sliding back into deflation is high,” he said, signalling the BOJ has offered sufficient stimulus for now to ease the blow from COVID-19.
NO EXIT EYED
Many analysts had expected the BOJ to hold fire ahead of a policy review in March, which aims to make its tools sustainable as Japan braces for a prolonged battle with COVID-19.
Sources have told Reuters the BOJ will discuss ways to scale back its massive purchases of exchange-traded funds (ETF) and loosen its grip on YCC to breathe life back into markets numbed by years of heavy-handed intervention.
Kuroda said the BOJ may look at such options at the review, but stressed a decision will depend on the findings of its scrutiny into the effects and costs of YCC.
He also made clear any steps the BOJ would take will not lead to a withdrawal of stimulus.
“It’s too early to exit from our massive monetary easing programme at this point,” Kuroda said. “Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”
(Reporting by Leika Kihara and Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore & Shri Navaratnam)
Banking
World Bank, IMF agree to hold April meetings online due to COVID-19 risks

WASHINGTON (Reuters) – The International Monetary Fund and the World Bank have agreed to hold their spring meetings, planned for April 5-11, online instead of in person due to continued concerns about the coronavirus pandemic, they said in joint statement.
The meetings usually bring some 10,000 government officials, journalists, business people and civil society representatives from across the world to a tightly-packed two-block area of Washington that houses their headquarters.
This will be the third of the institutions’ semiannual meetings to be held virtually due to the pandemic.
(Reporting by Andrea Shalal; Editing by Chris Rees