Towards the bank of tomorrow

Banks are looking to become truly digital – taking service up several notches, enhancing the customer experience, accelerating automation and in turn benefiting from cost efficiencies.

Our 24/4 connected world is changing the way people want to bank.  Customer needs are changing alongside their behavior and expectations, honed by their experience with online retailers, and more recently fintechs and powerful Silicon Valley giants such as Apple and Google. Customers now demand an anytime, anywhere personalized banking experience.  

Financial institutions are already drawing on robotic processing automation and intelligent tools automation to deliver on customer expectations. Wealth management robo advisors, for example, provide automated, algorithm driven investment advice based on a customer’s personal profile. This, however, is only just the beginning.

A true digital bank’s entire infrastructure, all functions and delivery platforms, are totally digitized. Through this transformation it can streamline the customer journey, add value and create powerful new revenue streams. At the same time, it has the agility and flexibility to deliver against aggressive cost-income ratios, while supporting non-traditional business models. Here we looking at key technologies that are helping to shape the banks of tomorrow.


Banking-as-a-Service (BaaS) will help financial institutions stay relevant in the digital age by enabling them to introduce new services to new markets quickly to meet changing customer needs. To achieve this banks are moving outside their comfort zone and embracing open application programming interfaces (APIs).

The European Union’s revised Payment Services Directive (PSD2) directive which came into effect at the beginning of the year is pushing the concept of open banking, mandating that banks open up their systems to third parties and provide interfaces to call up account information and initiate payments. Banks’ partners can use this information to create valuable services and products such as analytical dashboards and virtual intelligent banking assistants.

Open banking APIs are the inescapable route forward for banks, according to Anuj Agrawal, senior research manager, IDC Financial Insights Asia/Pacific. “For the consumer, open banking APIs will mean visibility of bank-related information at one place, accessibility to personalized financial products and services without compromising security, and competitive and lower charges such as reduced charges on card payments and better rates on loan/credit products,” he explains.

The Open Banking Project, for example, is an open source API and app store for banks that allows them to enhance their digital offerings by tapping into an ecosystem of third-party applications and services. Applications that use the Open Banking API project include The Speaking Bank for the visually impaired and SnapCheck, which enables banking customers to write and send digital checks instantly to anyone.

Big data analytics

We will see corporate banks invest $2.2 billion in big data and analytics this year, up 20 percent on 2017, according to analyst firm IDC. Banks are switching from a transactional to an insight-as-a-service model capable of providing real-time predictive analytics on a number of key areas ranging from cash flow and reducing customer churn to fraud and compliance.

Big data analytics will enable banks to get a more detailed picture of their customers to provide personalized services, improve onboarding, customer retention and help them to upsell and cross-sell products. As well as improving sales and growing the customer base, banks can also make large savings on regulatory compliance. McKinsey estimates that through new analytics producing more accurate regulatory reports quicker, domestic systematically important banks (D-SIBs), also known as national SIFIs in Europe, can save up to $400 million annually.

Data analytics will also help banks to provide a seamless omnichannel experience for customers. McKinsey estimates that in some regions 65 percent of customers now interact with their banks through multiple channels. This can make banking complex as they may start their first step in one channel, loop back to another and finish in a different channel. Analytics makes it possible for the bank to produce a consistent image of the customer journey – and produce new business models that match customer demands.

Artificial intelligence (AI)

Gartner predicts that by 2020, AI will be persuasive in almost all new software products and services. It is little surprise that banks are experimenting with AI to give them a competitive edge over the competition through informed decision making and better customer service.

AI is being used in chatbots to answer customers’ basic queries. These chatbots will become more intelligent over time, freeing up customer service agents to deal with complex issues that require human interaction. 

Banks are also looking at physical robots to enhance the customer experience. As part of its plans for a branch of the future, HSBC has introduced a robot at its flagship New York branch which can answer basic questions and encourage customers to use self-service banking options.  Eventually customers will be able to carry out transactions on its integrated tablet.  HSBC believes the robot will allow bank staff to have more time for high-value customer engagements and is planning to launch robots across its US branches.

A number of banks including Bank of America are using virtual assistants to communicate with customers and JP Morgan is using bots technology to execute trades more efficiently. Wells Fargo has set up an AI enterprise solutions team specifically to accelerate its AI efforts and better leverage its data using the technology.

AI could eventually manage our financial well-being, advising us on how to best invest our savings or predict when we might have unexpected outgoings.


Blockchain, the distributed ledger that provides a trusted and unchangeable record of transactions, has great potential in the banking industry in terms of cross-border payments, smart contracts and identity management to name but a few. Banks are already investing heavily in the technology to get ahead of the curve.

Gartner is forecasting that the business value add of blockchain will grow to more than $176 billion by 2025 and hit $3 trillion by 2030.
Major banks are already collaborating to speed up blockchain innovation. Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street, for example, have joined forces to work together on the UBS utility settlement coin initiative, a type of digital cash to accelerate payments and settlements in the capitals market. Blockchain will make payments more reliable and easier to audit.

Blockchain is also being examined to simplify other markets. Bank of Montreal, CaixaBank and the Erste Group have linked up with IBM and UBS to build a global trade platform based on blockhain. It will help organizations more easily build multi-party, cross-border trading networks around the world.

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Jan Howells

Jan has been writing about technology for over 22 years for magazines and web sites, including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.