Technology’s steady march into nearly every aspect of our lives has brought sweeping changes to the way companies are created and run. The digitalisation of the banking sector in particular has been widespread, and has accelerated noticeably in recent years.
Cybersecurity should be at the heart of each financial institution’s digital strategy, and it must inform every technological implementation
In fact, nearly 2,900 physical bank branches have closed in the UK alone over the past three years, as more customers turn to online banking instead. In the US, meanwhile, the number of brick-and-mortar bank branches dropped by more than 1,700 in the 12 months to June 2017, the biggest decline on record.
But breaking from tradition to adopt modern practices is no easy task: banks must grapple with new regulations while attempting to update legacy systems and integrate new, often disruptive technologies. What’s more, consumers are increasingly demanding: they expect their banks to provide a convenient and flexible service that seamlessly incorporates the latest developments.
The World Finance Digital Banking Awards 2018 celebrate the organisations that are successfully tackling the industry’s challenges and driving the digital revolution with dynamic business strategies and groundbreaking technologies.
On the defensive
A number of high-profile cyberattacks have shaken the business world in recent years. In 2017, Ransomware and malware attacks – such as NotPetya and WannaCry – opened executives’ eyes to the sophistication and complexity of the threats they face, highlighting the fact that large businesses cannot simply outsmart cyberattackers.
Unfortunately, these threats haven’t abated: according to cybersecurity firm McAfee, cybercrime now costs the world economy nearly $600bn annually, or 0.8 percent of global GDP. With threats continuing to make the headlines in 2018, the financial services industry has finally started connecting the dots, investing more money in cybersecurity. In fact, the number of jobs addressing cyberthreats in the sector is expected to grow by 37 percent annually until 2022.
While this is undoubtedly a good start, banks’ responsibility to financial markets and customers means they must go further. Moving forward, cybersecurity should be at the heart of each institution’s digital strategy, and it must inform every technological implementation. The banks that prove resilient through these challenges will secure the trust of consumers and achieve commercial success.
Best foot forward
In 2016 and 2017, many financial institutions became increasingly aware of the opportunities presented by new technologies and business models. Last year, however, that awareness turned into action. Whether used to communicate with customers via chatbots, identify fraudulent activity online or analyse large data sets, artificial intelligence (AI) is being adopted across the financial landscape to improve efficiency and cut costs. AI has also helped reshape banks’ trading departments and allowed for the introduction of personalised products.
Distributed ledger technology is another area that banks are eyeing closely. When cryptocurrency prices spiked in late 2017, corporate interest in blockchain – the technology underpinning many digital tokens – surged. While the price of bitcoin and other cryptocurrencies has since tumbled from those heights, many institutions remain optimistic about the potential applications of blockchain technology – namely, its use in execution, clearing and settlement processes. Global management consultancy firm Accenture even estimates that distributed ledger technology could save investment banks as much as $10bn through improved efficiency.
Blockchain could also benefit cross-border payments: experts in the field have said their tech will transfer money across international borders quicker and with fewer costs. Further, it will help institutions meet Know Your Customer and anti-money-laundering standards by providing a secure record of customers’ identities.
As banks jump into these new and exciting technologies, they must remember that resources need to be properly managed for them to benefit the entire organisation. The operations of legacy infrastructure must be kept running smoothly as modernisation and digitalisation occur, and any internal disruption should be minimised. For this reason, IT budgets are expected to expand: a 2017 study by Celent, a research consultancy focused on financial services technology, suggested IT spending will increase by 4.2 percent annually over the current four-year period, reaching $296.5bn by 2021.
Fintech continued to be a huge area of development and growth for the banking industry in 2018. According to KPMG’s Pulse of Fintech 2018 report, global investment in fintech had surpassed the total spent in 2017 within the first six months of the year, and was on course to exceed the peak recorded in 2015.
Fintech firms continued to raise the bar for more established banks last year by using their agility to respond quickly and efficiently to consumer demands, while finding new solutions to long-standing issues. The growth of fintech was particularly pronounced in the insurance and regulatory industries during the first six months of 2018. Europe was the main beneficiary, with the introduction of the Second Payment Services Directive and General Data Protection Regulation forcing companies to adapt quickly. As a result of the new requirements, ‘regtech’ companies witnessed a substantial increase in funding.
Neobanks (sometimes referred to as challenger banks) also present an exciting prospect for investors, especially in Europe. According to Sven Korschinowski, a financial services partner at KPMG in Germany, digital challengers such as N26 in Germany and Revolut in the UK were attracting attention from global investors like Chinese tech giant Tencent: “This interest highlights the potential [that] investors see in the market. Many global investors see digital banks as an entry point into the European market.”
The digitalisation of banks is engendering real change throughout the industry – from established investment banks adopting AI, to agile neobanks giving consumers advanced mobile offerings. But even as the industry sits on the cusp of a digital revolution, there is work to be done, especially with regards to preventing data breaches and ensuring the integration of new technologies does not hinder day-to-day business operations. The World Finance Digital Banking Awards 2018 highlight the companies that have achieved success in the face of these multifaceted challenges.
World Finance Digital Banking Awards 2018
Best Digital Banks
Argentina: Nación Servicios
Barbados: CIBC FirstCaribbean
Chile: Banco de Chile
Costa Rica: BAC Credomatic
Dominican Republic: Banco Popular Dominicano
France: BNP Paribas Fortis
Kuwait: Gulf Bank
Mexico: BBVA Bancomer
Myanmar: CB Bank
Nigeria: Access Bank
Panama: BAC Credomatic
Turkey: Garanti Bank
UAE: Mashreq Bank
Best Mobile Apps
Andorra: MoraBanc App – MoraBanc
Argentina: Pim – Nación Servicios
Barbados: CIBC FirstCaribbean Mobile – CIBC FirstCaribbean
Brazil: Banco Itaú – Itaú Unibanco
Canada: EQ Bank Mobile Banking – EQ Bank
Chile: Mi Banco – Banco de Chile
Colombia: Bancolombia App Personas – Bancolombia
Costa Rica: Banca Móvil – BAC Credomatic
Dominican Republic: Banco Popular Dominicano
France: Hello bank! – BNP Paribas Fortis
Germany: ING-DiBa Banking to go – ING-DiBa
Kuwait: Gulf Bank Mobile Banking – Gulf Bank
Mexico: Bancomer móvil – BBVA Bancomer
Myanmar: CB Bank Mobile Banking – CB Bank
Nigeria: Access Bank – Access Bank
Panama: Banca Móvil – BAC Credomatic
Portugal: ActivoBank – ActivoBank
Russia: Touch Bank – Touch Bank
Singapore: OCBC SG Mobile Banking – OCBC
Spain: BBVA Spain – BBVA
Turkey: Garanti Mobile Banking – Garanti Bank
UAE: Snapp – Mashreq Bank
UK: Tide Business Banking – Tide
US: Ally Mobile Banking – Ally Financial