New trends in finance, from open banking to the rise of fintech startups, are shaking the industry and putting customers at the heart of the future of banking, 
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What does the future of banking look like, according to the experts?
Raconteur | Francesca Cassidy | May 1, 2019
New trends in finance, from open banking to the rise of fintech startups, are shaking the industry and putting customers at the heart of the future of banking,
What can traditional banks learn from fintechs?
What Bank Leumi and Pepper teach us is that both traditional banks and fintech companies have their strong suits, although
Mr Paris believes the relationship has gone through three phases:
- The first saw traditional banks detect fintech as a threat and attempt to squash them through regulation.
- The second came as the banking industry recognised the true value of fintech and set out to partner with or acquire them.
- We are now in the third phase. “Banks realise that simply acquiring a fintech company does not solve the problem, as the relationship is still one-to-one. What is needed is for a fintech to have access to thousands of banks and vice versa.”
See: Where Top US Banks Are Betting On Fintech
The question is, will traditional banks consent to?
Matthias Kröner, founder and former chief executive officer of the Fidor Group, one of Europe’s first digital banks, thinks not. “I don’t think a big bank corporation is culturally able to deal with innovation”, he says. “It’s a question of compliance. In order to embrace the innovation of fintechs, you need a special governance structure that allows for a fail-fast, laboratory approach. Traditional banks are too afraid of risk.”
One challenge for fintechs is keeping the innovation level high. The bigger an organisation gets, the more you have the tendency for everyone to lean back - Matthias Kröner, the Fidor Group
So what is the future of banking? It is certainly digital and, as a result, more open, more transparent, more ambitious. Most importantly, it lies in the hands of the customer. Any financial services provider looking to make it to 2030 must embrace this truth, and use all the digital and technological tools at their disposal to make their offering as customer-centric as possible.
What does the future of banking look like, according to the experts?
Ian Bradbury, chief technology officer for financial services, Fujitsu
“The next wave of digital banking solutions, enabled by advanced data analytics, APIs and Open Banking legislation, will go much further. We will see a seamless incorporation of financial and pseudo-financial services into daily activities, both digitally and in the physical world.”
See: Open banking has a big branding problem, government’s public opinion research suggests
Simon Paris, chief executive officer, Finastra
“My vision is that banking will go back to what it was born for. To provide a financial service. To help people and businesses unlock their potential. Instead of being about how many products per customer you have, it will be about customer’s exchanging their personal data for better service. You tell me how much you drive, and I’ll decrease your car insurance. You share your smart watch data and I’ll decrease your life insurance.”
Matthias Kröner, founder and former chief executive officer, the Fidor Group
“Customer demands for innovation never changed a market as much as changes in regulation, like we’ve had with open banking. PSD2 is finally forcing the banks to be customer-centric. It will mean an easier and better life for customers. I'm absolutely convinced of this. If we combine the success of data with AI and machine-learning - the sky is the limit.”
Flavia Alzetta, chief executive officer, Contis
“In terms of payments, I think the shift from physical assets to virtual or no assets will be very visible over the coming years. I spent 14 years at Amex, and I think the physical card will disappear. The more innovative payment options coming up - such as
biometrics - will simplify payments immeasurably.”
Rakefet Russak Aminoach, chief executive officer, Bank Leumi
“10 years from now the retail banks which take the right steps will be much more significant than they are today, and some will have ceased to exist. I don't think we will have one bank like one Amazon or one Google, I believe that we will have local winners. Regulators are a local thing, as are currencies, so I don't think we'll have one bank for the whole world, but I believe that, in each market, we will have a huge winner who will do the right thing and take a large part of the market.”
See: One size doesn’t fit all: Strict regulations meant for big banks holding back fintech in Canada
Michal Kissos Hertzog, chief executive officer, Pepper
“The CEO of AirBnB was asked a similar question. He said it doesn't really matter what AirBnb offers in 100 years - whether it is still a question of booking rooms online or not - if their DNA and culture stays the same, then AirBnb will stay relevant. Banking changes all the time, the value proposition and user experience will change.
Banks which will can change and stay relevant will survive, and the others will not.”
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