Technology will continue to be one of the biggest disrupting forces in the banking and finance sector in 2017, with innovations such as blockchain, chat bots, robo-advice and virtual reality finally breaking through. In 2016, we saw the time it takes to go from breakthrough technology to mass market application reducing as technology disruptors reshaped big business practice, and this breakneck pace doesn’t show signs of abating as we enter a new year.
Gideon Hyde co-founder of Market Gravity, the proposition design consultancy, shares his predictions for 2017 and advises what business leaders in the banking and financial services sectors should be doing to recognise 'tomorrow's business' and ensure they enhance their offerings to stand out in this increasingly competitive marketplace.
Silicon Valley investor Marc Andreessen cites blockchain as “one of the most fundamental inventions in the history of computer science". Put simply, blockchain uses complex cryptography to ensure that financial transactions can be verified and can’t be tampered with, with minimal third party involvement.
Bitcoin is the best known application of blockchain so far, but its potential extends far beyond digital currencies. The blockchain process makes error and fraud easier to spot and it can remove the need for a middleman, thereby reducing costs. Indeed, experts say it is set to disrupt every industry where transactions and trust are key.
An increasing number of banking organisations are developing and launching robo-advice services for customers. Robo-advice involves replacing face-to-face advice with online, automated guidance and execution – not from an actual robot, but from an algorithm which engages with customers to create an improved experience. The savings and investment sector, in particular, has adopted this new technology to engage with customers in a way that adds value and helps create an improved brand experience. Take the Standard Life Financial Butler, for example; an automated chat-based app that provides customers with a new way to explore and interact with their pensions and investments, make changes to their account information and get quick and easy access to Standard Life experts.
While its growing popularity could mean the beginning of the end for traditional face-to-face advice, there is an opportunity for advisers who are willing to consider incorporating these automated services into their offering. Major banks are already beginning to do this by targeting potential customers considering their first steps into financial advice. This low-cost stepping stone can help get customers on side ready for when they may require more comprehensive guidance.
With the growing popularity of the new megatrend known as 'frictionless retail', wallets, checkouts and queues could be set to be things of the past. Actually, frictionless retail has been on the cards since around 2005, when Apple introduced a mobile POS system across its US stores which allowed staff to roam the shop floor taking payments in order to make the customers' shopping experience quicker and less painless. However, it now seems to be one of the biggest buzz phrases in the sector with retailers, payment providers and tech developers working together to create more ways to eliminate friction. One of the latest innovations doing just that is the Amazon Dash button, which makes re-purchasing and paying possible with the simple push of a button.
Satisfying the rising demand for contactless payments and digital wallets such as Apple Pay, will continue to enable payment providers, banks and tech developers to increase sales, improve the customer journey and build brand loyalty.
Chat Bots – the rise of the chat interface
More and more financial services and banking companies are using chat bots to hold automated conversations with customers to help them make decisions and respond to queries. The advantages to banks considering using them are that they are less expensive to produce than apps, they help raise brand awareness and they can save human resourcing costs, effectively replacing the work of customer service agent. The prospect of bots actually replacing human jobs is still a way off, however. Banks, payment providers and financial services organisations should look at augmentation rather than replacement. Bots can help make employees' lives easier by taking away some of the strain but, when enquiries become more complicated, customers will still require the help of a human being.
Voice and motion control interfaces
Recent developments in user interface - the way human beings interact with a device - are now offering us much more attractive options than a simple keyboard and a mouse. Take voice recognition technology, for example, Apple's Siri - a personal assistant application designed to work through IOS. Launched much more recently, Amazon's Echo. Using advanced voice technology, Alexa can tell you the time, deliver news updates, play your music choices, notify you of your day's appointments and much more.
Another emerging UI was first foretold by Tom Cruise in the 2002 sci-fi movie, Minority Report when he was seen donning his magic gloves and gesturing at a screen to manipulate images and datasheets on his computer system. Now motion control, or gesture interface, is actually beginning to show us a future where computer systems will be able to interpret human hand gestures and emotion recognition from the face via mathematical algorithms.
VR and AR
Immersive technologies such as virtual reality and augmented reality have started to hit the mass market, but the way in which they will affect banking businesses has yet to evolve. In 2017, the consumer and business content and application of VR and AR will become clearer. VR and AR has huge potential to control a flow of information to the consumer, integrated across mobile, wearable technology and IoT etc. allowing rooms and spaces to connect with consumers, virtual worlds and conversations. It’s possibly one of the most exciting areas to be working in for finance and banking brands right now.
Gideon is one of the co-founders and a partner of Market Gravity and is passionate about creating growth and innovations businesses across the UK and beyond. He is an expert in helping big businesses launch significant new ventures into the marketplace and take them to scale. He led the programmes to develop and grow npower’s home energy services business, to launch B for Clydesdale and Yorkshire Banking Group and to design and launch Retiready, Aegon’s digital retirement service.