The world of retail banking will be subjected to significant change in 2018, with both regulatory and technological factors to the fore.
On the regulatory side, the era of PSD2 and open banking will commence on 13 January, 2018. Banks will be forced to relinquish the monopoly they hold on customer data, theoretically allowing third party providers to compete on a more even playing field.
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This has the potential to dramatically increase the level of innovation and competition in the market, which should benefit consumers and force the incumbents to up their game.
However, there is a risk that this new era could open with a whimper rather than a bang – there has been precious little effort made to educate the public about what is happening, and consumer awareness is consequently very low.
Unless an intensive effort is made to publicise open banking and clearly explain its benefits, consumer uptake of related services is likely to be slow, particularly given renewed concerns over data security highlighted by the recent Equifax breach.
On the technology front, artificial intelligence (AI) will be one of the key buzzwords of the year. Banking will be profoundly affected by both customer-facing and back office implementations of AI. Consumers will be confronted by a plethora of chatbots and virtual assistants that will allow them to communicate with their banks through natural language.
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By GlobalDataThese assistants will also use sophisticated analytics to examine consumers’ finances and offer high quality insight and recommendations that will help consumers make the most of their money.
Bank of America will be one to watch: it has been testing its assistant, dubbed Erica, for over a year now, and sneak previews suggest that it will aim to offer proactive insight that goes beyond users’ immediate expectations.
With pressures on wages and household budgets continuing to mount, these services could prove invaluable over the coming years.
Daoud Fakhri is Principal analyst at GlobalData
