We’ve been talking about digital banking for a while and we’ve made considerable progress towards creating a fully digital banking experience. However applying for a current account online has proven rather difficult.
You can only get so far before you’re required to go to a branch to prove your identity. Clearly this doesn’t sit alongside the vision for a connected, mobile society.
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Starling Bank looks set to change all this. It’s the only bank, traditional or challenger, to be able to allow for completely digital onboarding, including identity verification. It may well signal the arrival of wholly digital banking and, in combination with PSD2 could mean that 2018 is the year of the digital bank.
Regulation pushes identity up the agenda, the iPhone X sees it becomes mainstream
Over the last year, identity has become an increasing focus for many financial institutions. AMLD4 and SCA under PSD2, and eIDAS have brought in the necessity for new, stricter checks, the ability to verify new forms of identity and the requirement to make sure this doesn’t impact the customer experience.
In the search for the killer identity app, mobile phone cameras have been employed to take fingerprints, photos of ID documents and now the user’s face.
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By GlobalDataNow, the inclusion of FaceID on the new iPhone X points the way towards a potential mass adoption of facial recognition tech. Countless services could now be accessed using your face, in the same way as with your fingerprint.
Opening a bank account, applying for a mortgage or taking out a loan could be as simple as paying for your Uber journey.
Reports of the cheque’s demise have been greatly exaggerated
2018 was to be the last year cheques were to be used in the UK, but as the deadline approached it was clear this was unlikely, even more so given the roll out of cheque imaging technology.
Despite the best efforts of some, cheques are still adding to their 350+ year history with 477m still changing hands in the UK in 2016.
In developing digital cheque imaging – effectively an entirely new system that may eventually precipitate a change in law – banks have signalled that the cheque is nowhere near dead.
Many businesses still rely on cheques, as do charities and parts of the government. With such entrenched support for the cheque, it will be many years before we see the end of this venerable payment method.
2018 will be the year of the challenger bank
If 2017 was the year that the challenger banks solved the digital onboarding problem, then 2018 will be the year we see a mass migration of consumers to these banks. In finding a solution to the onboarding problem, Starling Bank removed one of the last remaining hurdles to increasing market share and with Monzo and Revolut the latest to begin to offer current accounts, the stage is set for an all out assault on the dominance of traditional banks.
Traditional banks have begun to fight back, with some embracing digital transformation. However, challenger banks’ agility and their willingness to collaborate with third parties under PSD2 looks set to provide the incumbents with more than just a challenge.
Rene Hendrikse is Vice President and Managing Director for EMEA at Mitek
