Banking is being substantially disrupted by the growth of FinTech, financial technology businesses that provide technology-driven financial products and services. In addition, Big Tech, big technology businesses such as Google, Facebook and Amazon, are also disrupting traditional banking by leveraging a wealth of customer knowledge to deliver alternative financial products and services. As a result, the face of banking is changing substantially. So what will the future of banking look like, and what skills will be needed going forward? We look at:
- Emerging digital technologies
- Managing rapid change
- Cybercrime prevention
- Leveraging data
- Data integrity
While the details may be unclear, we can be sure that banking in the future will look substantially different from how it looks today. Customer expectations are changing rapidly; advancing technologies are driving new banking products and services; new innovative banking business models are in the pipeline; the customer has emerged at the centre of focus. Apart from these changes, banking is facing an ever-growing external threat. Fraud and cybercrime are becoming ever-more sophisticated and difficult to counter. As a result, the future bank must protect its customers at all costs, and doing so will be a significant challenge.
Emerging digital technologies
Digital technologies have already transformed banking, and the transformation is ongoing. Artificial intelligence, machine learning, blockchain technologies, and big data analytics are now essential tools in multiple aspects of banking, including rapid credit scoring, financial management, peer to peer lending, low-cost cross-border money transfers along with many more. The drive is to better, more efficient and increasingly innovative solutions, products and services. As a result, the demand for skills in these areas is likely to outstrip the supply significantly.
Managing rapid change
Banks changed little over many decades, but they did so amazingly quickly when change and disruption eventually came along. It took no more than a decade for FinTech to change the face of banking, leaving traditional banks with little option but to embrace those changes themselves. Employees will need to be open to constant change and more flexible in their approach, while change managers will play a critical role in keeping their organisation head of the game.
Criminals are becoming increasingly adept at leveraging technology to steal information; traditional prevention methods provide little if any protection. As a result, future banking needs to at least match or preferably exceed the levels of sophistication reached by criminals. Doing so will require a significant effort from fraud and cyber protection teams adept at the latest technologies, including machine learning, artificial intelligence, and blockchain, to detect and protect against attack. Any breaches will potentially severely damage the banks’ reputations.
Data is probably the financial sector’s most valuable asset. Traditional banks use data from conventional sources such as credit agencies to screen and assess their customer’s credit histories when offering them loans and mortgages. FinTech companies access real-time data from social media and other sources to assess risk and price products and services based on the results. Big Tech businesses potentially need to look only at their customer databases to evaluate the behaviour of their customers. Leveraging and monetising this data will be an even bigger task than it is today. Data analytics will be a much sought after skill across the whole financial sector.
While traditional banks have a good reputation for protecting sensitive data, the same cannot be said about recent incumbents to the financial sector. In fact, many of the Big Tech organisations entering the financial industry, such as Google, Facebook and Amazon, have acquired a reputation for having a cavalier attitude toward their customer’s personal data. Inevitably this will change, probably through a combination of regulation and a move to an improved self-imposed ethical approach by the big players. As a result, ethics and compliance management will become an important role.
Dividing up or integrating the spoils?
It would appear that the three great pillars of future banking will be traditional banks, FinTech businesses, and Big Tech. However, they are unlikely to divide up the customer base by offering alternative sets of products and services. Doing so would be highly inefficient and, to many people, confusing too. Instead, it is far more likely that we will see some integration, with each sector bringing to the table what it does best. Firms will need to select their partners with care to create the best ecosystem for their customers. Managing the ecosystem will be a critical and demanding role that will play a large part in determining the organisation’s future success.
Who said banking was dull?
The future of banking will be exciting, demanding the very best of available talent. We have outlined above, some of the skill sets that will be in massive demand in the future and that are ripe for development right now.