By Martijn Hohmann, CEO, Five Degrees

The ‘Internet of Payments’

Advancements in mobile and real-time payments in 2019 will lead to the creation of an ‘Internet of Payments.’ Customers will have access to a wider portfolio of payment options, from the use of Blockchain and virtual currency, to cross-border banking and eWallets.

Earlier in 2018 we saw a use case of Blockchain in banking involving a cross-border funds transfer between Krungsri: Thailand’s fifth largest bank and Standard Chartered in Singapore facilitated by a Krungsri’s Blockchain Ledger. We’ll continue to see banks harnessing the power of Blockchain in 2019 as it becomes another form of payment solution used as commonplace.

Cognitive technologies to stay relevant

According to CACI, 35 million people will be using their mobile as a preferred banking platform by 2023. Banks will begin to adapt to these changes in customer preferences in 2019 via cognitive computing.  This will ensure they stay relevant in a digital age, generating insights to provision for the right mix of branches, digital, and mobile offerings.

Through using cognitive computing systems, including real-time insights and information processing, banks can seize an opportunity that will grow revenues up to 30 per cent by 2022.

A robust strategy to face regulatory challenges

Regulation will continue to dominate the banking and finance landscape of 2019. With the introduction of PSD2 and GDPR earlier in 2018, banks will be required to be regulatory compliant or risk facing heavy fines.  For banks to stay compliant they will need to be ready and tested by March 2019.

Overcoming regulatory challenges needs a robust strategy, operational and infrastructure change, a comprehensive assessment of risk, and seamless execution. To align with regulation, banks must facilitate digital transformation across their entire business ecosystem by opening up of their APIs to third parties. This will provide full visibility over customer data, and enable banks to cater better to customer needs.

Industry collaboration to improve customer experience

Over 2018 we saw disruption to the customer experience of traditional banks caused by outdated legacy IT systems.  As a way of overcoming these problems, we’ll see banks form greater collaborations with FinTechs and third parties to deliver a seamless experience for end-users and a wider array of services: also known as ‘Open Banking.’

‘Open Banking:’ the opening up of banks’ APIs, will result in multiple partnerships between banks, fintech companies, and other professional service providers, such as accountants and lawyers. Services provided via ‘Open Banking’ in 2019 will become the norm, making it possible to integrate blockchain, video chat, mobile wallets, and data analytics with existing traditional offerings as one complete end-to-end solution.

We will also see smarter collaboration between FinTechs and corporates in 2019. 8 in 10 (82 per cent) of incumbents are expected to increase FinTech partnerships in the next three to five years, with a greater investment by corporates in FinTech collaborations rather than buying products. Smart collaboration is expected to impact up to 80 per cent of existing banking revenue pools by 2020.

Speeding up while remaining secure

The need to become fully digitalised, secure, and regulatory compliant will result in an uptake of cloud based solutions, making it easier for banks to have visibility to customer and business data on a single interface.

Financial institutions understand the importance of building IT architecture on cloud platforms already, but according to a recent Accenture report entitled ‘Cloud and Clear’ they lack a cloud strategy that will enable migration to the cloud. In 2019, we’ll see banks working more closely with technology specialists, to create and deploy an IT architecture that will provide consistency and efficiency to banking operations in a digital age.

We will also see testing and the deployment of Quantum Computing technology, enabling corporations and financial institutions to deliver their products and services at greater speed to their customers. We’ve already seen the experimentation by Barclays and JP Morgon Chase with IBM’s quantum technology. Other banks will do the same as they realise the benefits of Quantum Computing to drive efficiencies and transform operations.