Misys EMEA Market Forum, Day 1: Predicting the Future of Banking

Misys appears to be in a good place right now. Syed spoke about how the company had taken new growth to invest back into the business and the products that the organisation offers. While banks face challenges such as regulation, risk and delivering consistent customer experiences (among many others), Syed outlined that the Misys vision is to make financial institutions (FIs) resilient and efficient.

The company’s rebranding of its offerings into a ‘Fusion family’ – FusionBanking, FusionInvest, FusionCapital and FusionRisk – is one way that it hopes to offer banks this support. Indeed, the FusionBanking Essence product that launched on Day One of the Forum is one such retail banking solution that the company hopes will make a splash in the market.

Syed also touched on the rise in importance of supply chain management (SCM) to banks’ clients, and how the banks themselves will have to respond to this trend. He noted that US$17 trillion additional open account trade is predicted by 2020, and that banks need to innovate their supply chain solutions. This isn’t a new topic for gtnews readers, but is certainly one that will continue to be with us for some time.

The Millennials Bug

Continuing the predictive theme, technology futurist Brett King followed Syed with a talk about how to build a bank for the next generation of bank customers. These new customers, variously bracketed as ‘digital natives’, ‘generation Y’ or ‘millennials’, are already disrupting other industries. King cited the launch of phone app Uber, and the resulting protests from taxi drivers in several cities across Europe, as an example of the destruction of industry processes caused by technology. King said that it takes time to adapt to changes – in this case technological changes – and that is where the challenges come in.

Looking at the banking sector, King noted the amount of talk about regulations and how this is driving many of the actions taken by banks. However, he stressed that regulations never improve the customer experience, and suggested that banks should therefore not build around regulation.

Technology in the consumer world has evolved at a rate that has dramatically outpaced the banking world, but sometimes not as futurists themselves would predict. King commented that a decade ago, nobody could predict that phones with remarkable processing speeds would be largely used for playing games and using social networks. Likewise, people then thought that the smartphone of the future would be focussed around content consumption and hardware. That completely missed the reality, which is that content creation has become a major factor today through apps such as Vine. King forecast that by 2017, two-thirds of all mobile data traffic will be video.

Where this is relevant to banking is that, by the end of the decade, the so-called ‘millennials’ will make up half of all retail banking customers. According to King, these customers are used to receiving information and advice from everyday technology – be that wearable technology like Google Glass or even a smart fridge able to advise you on the healthiest meal to cook from the ingredients within. Why therefore should banks suppose that the human approach – namely a branch network staffed by advisors – will be a differentiator when this new breed of customer is looking for a bank or product?

Taking on another part of traditional banking, King believes the FIs that still require a physical signature are in deep trouble. He commented that banks are absorbing unacceptable risk if they rely only on a paper application to assess the risk of new business, whereas a far clearer picture of a customer’s behaviour can be built up digitally. Additionally, on the signature point, King said that around one in four of today’s university graduates don’t use a signature.

Tomorrow’s Job Titles

Turning to mobile banking, King discussed its evolution. FIs had regarded the smartphone as a way to carry a payment card on a phone, or as a way of having internet banking on a small screen. He said the key to mobile banking was the ability to have downloadable engagement – customers in a shop want their phone to tell them if they can afford to buy the item that they are looking at.

King suggested that banks should understand this and consider ways to provide the level of engagement which gets customers checking their banking app every day. As they are unlikely to do this purely to check their balance on a daily basis, banks need to integrate themselves more into their customers’ lives.

To adapt to changing consumer behaviour, King predicted that traditional banking skills would be of limited use. Instead, a series of new job titles should gain prominence at banks that can truly cater to the new generation of customers. These job titles included:

  • Data Scientist: King described this as basically a combination of a statistician and a programmer; someone who can crunch the numbers that describe individual consumer behaviour.
  • Storyteller: This person’s role is to put FIs in a customer’s life when a revenue opportunity presents itself. To express this a touch less cynically, when the customer has a problem that needs to be solved.
  • Behavioural Psychologist: According to King, this individual’s job is to work out the nuances of the bank’s engagement with customers.
  • Algorithmic Risk Specialist: This person’s role is to work on the intelligence of risk decisioning, based on the data available.
  • Community Advocacy Builder: King described how a simple YouTube blogger (@pewdiepie for readers who wish to check; apparently he plays video games) receives massively more viewers per month than event television such as the final of ‘The Voice’, and for a fraction of the price. The community advocacy builder would work to involve content creators like this as a way to bring new millennials customers to the bank and retain them.

King concluded by suggesting that there will be more changes in financial services in the next 10 years than there has been in the past 100. While his presentation covered retail banking, it also has implications for transaction banking. A treasurer is also a consumer in their free time.

As the technology in our personal lives accelerates and becomes increasingly user-friendly, it is important for banks and software providers to understand how this can be applied bring greater efficiency to treasury processes and make workflow more intuitive.

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