5 Digital Finance Trends That Will Redefine Banking In 2017

By Fiona Ho

Banking is about to get a lot more exciting this year.

Fintech exploded in 2016, a year that saw exponential increase in governmental support and interest in the field.

Today, almost every type of financial activity — from banking to payments, to data and analytics — is being re-imagined by fintech start-ups, some of which have generated exponential funding from venture capitalist investors because of their potential to traverse different markets.

As the new year unfolds, we take a look at what to expect in the world of digital finance this year and how it will change the way you do banking.

  • Enhanced customer experience

Simpler is always better when it comes to customer experience. So, in 2017, a key focus is to enhance customer services through proactive customer experience and by providing more personalised financial services, Fintechnews Singapore predicts. This could include areas like mortgage, savings deposits and payments.

Further, a research study done by the Financial Brand found that many traditional financial services organisations continue to provide relatively poor performance when it comes to delivering a customer-focused digital account opening, on-boarding and facilitating cross-selling processes. These gaps present opportunities for institutions that want to embrace the potential of becoming more digitally proficient and customer-centric.

  • Advanced analytics, big data and artificial intelligence (AI)

Consumers have already shown their willingness to share information about themselves and financial institutions have been collating data. Yet up to this point, the promises and hype surrounding big data, advanced analytics and AI have yet to materialise, and the majority of these companies have yet to utilise the data collated to benefit the consumer, Fintech Singapore reports.

The year 2017 hence holds unprecedented opportunity for financial institutions to be true advocates of innovation for consumers by utilising data to the same level as other disrupted industries (think Amazon or Netflix), especially in delivering individualised engagement and personalised services.

  • Open APIs

Open banking basically refers to the use of open APIs that enables third party developers to build applications and services around a financial institution.

The use of open APIs plays a significant role in revamping traditional banking services — for one, it enables incumbent banks to build and launch a combination of new products and services faster and more efficiently than ever before. It also implies greater financial transparency options for account holders ranging from open data to private data.

Importantly, banks will also likely find open APIs attractive as they require minimal connection effort on their part while offering access to multiple third parties. Fintech companies, on the other hand, will benefit from gaining access into the large customer bases of these institutions.

  • More “bank-fintech” collaborations

In 2016, SoCash became the first fintech start-up to receive backingfrom the Monetary Authority of Singapore.

The year 2017 will likely witness more of such “convergences” in financial services, Sebastien Meunier, senior manager at Cappuis Halder & Co. predicts.

“There will be more cooperation between financial services and start-ups, blurring lines between traditional products (retail, payments and insurance in particular), and the acceleration of the convergence of technologies including mobile, distributed ledgers, IoT and cognitive computing,” Meunier was quoted saying by Fintech Singapore.

The increasing unmet consumer demands for digital banking solutions present various opportunities for fintech start-ups and traditional financial institutions to collaborate and leverage one each other’s strengths. For example, while fintech companies have the potential to deliver customer-centric solutions at a low cost, they lack scale. Meanwhile, traditional financial institutions continue to be viewed positively in important foundational areas such as trust and credibility.

  • Regtech will rise

RegTech, which focuses on helping financial institutions better manage their legal risks and to adhere to their regulatory obligations more easily and more cost-effectively, has been gaining attention in the burgeoning fintech world.

However, unlike fintech, where there is an element of competition between banks, regtech is an area where everyone can win by co-operating. Many regtech solutions are now becoming available to help banks reduce compliant costs, Henri Arslanian, PwC’s fintech and regtech lead for China/HK was quoted saying by Fintech Singapore.

A recent report by Deloitte highlighted the rapidly evolving regtech space, noting that new solutions for regulators and the regulated will likely emerge in 2017. Areas to watch include customer compliance processes, automated regulatory reporting and communications monitoring, the consulting firm reported.

This article first appeared on Asia.Finance.

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