Asking the right questions; AI-first banking; open banking and frictionless banking; Blockchain regulation done right — FinTech Summary 83
Ever increasing quantity of data provides us with more and more options to drive new insights. Companies are jumping on the big data bandwagon and, rightly so, trying to find new ways to improve their services and offerings. However, at a time when information is so abundant that we can get the answer to any question, the real responsibility becomes asking the right question.
Thanks for reading; YOU are awesome! Just hit reply if you want to get in touch :-)
Have a wonderful week,
Alex
Banking must move from mobile-first to AI-first
By Jim Marous
Technology continues to impact the banking industry, as more and more transactions move from physical to digital channels. The application of big data insights and advanced analytics (machine learning) has changed the internal operations, external experiences and competitive battlefield in financial services. With so much change, banks and credit unions are rethinking their business models for the future. While there are many important technological trends impacting the banking industry, none may be more important than artificial intelligence (AI) and the ability to use data, advanced analytics and digital technology to deliver a better customer experience. The number one trend around artificial intelligence is underscored by the fact that bankers believe artificial intelligence (AI) will ‘revolutionize the way banks gather information and interact with customers.’ This is in line with the findings from other industries, where the application of big data and machine learning is expected to provide a better understanding of customer beliefs and intentions, enabling enhanced customer experiences and better competitive positioning.
Open banking — is data the new currency?
By Alessandro Hatami
Banks across the globe are anxiously looking at the slow but seemingly inexorable progress of banking APIs. Regulation and market demands will require banks and other financial services firms to make it easy for another firm to gain access to their customers’ data, and to engage with their platforms to transact. Most realise that the world of financial services is going to be shaken to its foundations by their arrival. Banking APIs will usher a completely new era for banking. Financial services firms will have to accept a reality where their most valuable asset — their customers’ data — is now controlled by customers themselves. This may not be the end for the big banks and financial institutions, but it’s definitely a very different world from what they’re used to.
Frictionless finance with fintech
By Chris Skinner
Larry Summers, former director of the National Economic Council for President Barack Obama, writes a regular column in The Financial Times. His latest piece is his take on fintech, which has the main headline that fintech is taking away frictions in finance. FinTech to banking is like Skype to telecoms — drastically reducing margins; or like Netflix to Blockbuster — yes, some banks will go bust. 10 years from now, he predicts that one or two firms will have valuations of $250bn, the value of America’s biggest bank JP Morgan Chase, and maybe hadn’t noticed that Ant Financial is heading that way already. A further prediction is that the American internet giants won’t get into banking: I am “sceptical of the idea that one of the big tech players like Apple, Google, Facebook and Amazon would also become a big player in financial services (due to) the traditional American aversion to combinations of banking and commerce and also that I thought privacy rules would preclude their using their massive data troves to drive lending activity”. This illustrates the difference between the Chinese internet giants — Baidu, Alibaba (Ant) and Tencent (WeChat) [BAT] — and the American ones: Google, Apple, Facebook and Amazon [GAFA]. BATs are integrated versions of a Facebook, Amazon and PayPal in that they offer social, commercial and financial all-in-one apps.
Blockchain regulation: is Europe getting it right?
By Noelle Acheson
Despite increased investment, the banking industry in the U.S. continues to lag other regions of the world in the development of meaningful digital innovation. This impacts customer experience, cost structures, as well as revenue opportunities. Historically, the banking industry in the U.S. has been slow to innovate compared to other industries. When asked why this may be, most industry studies found legacy back office infrastructures, the lack of leadership commitment (culture), regulations and compliance, organizational silos and the lack of budget to be inhibitors. Despite these limitations, the U.S. banking industry has tried to increase their focus on innovation through upper management commitment and support of innovation initiatives, development of innovation labs, increases in dedicated financing, and even an openness to invest in, or partner with, fintech firms. Some may question if the increased level of attention has had any measurable impact.
Originally published at FinTech Summary.
