When you’re a fin-tech with tier one to tier four bank customers across the globe, you have a great vantage point to see how quickly technology is being adopted in different regions.
And there is plenty of variation, Sue Hutchison has discovered.
Ms. Hutchison is the group head of global treasury at D+H, a provider of fin-tech solutions to institutions in more than one dozen jurisdictions.
North America is at the forefront in adopting cloud-based SaaS services, Ms. Hutchison said. She estimates that 75 percent of CIOs already have a cloud-based solution or are moving in that direction. The rate is lower in Europe and under 25 percent in Asia.
“Buying a standard product hasn’t taken hold in Asia,” Ms. Hutchison explained.
Asia has quite a disparity as mobile penetration is high and mobile banking has taken hold in Singapore and South Korea.
Mobile banking has also become popular in Kenya and parts of sub-Saharan Africa thanks to a banking industry that is nimbler than its counterparts in more developed regions.
“Some banks are quite young, maybe 25 years old,” Ms. Hutchison explained. “They don’t have century-old information and legacy systems.”
Those older systems, which fewer and fewer bank personnel know how to maintain every year, are more rigid and tend to work on multiple issues at a time, she added. Newer technologies are decoupled and more flexible.
That has sent many older banks on a 10-15 year process of replacing giant, complex systems, Ms. Hutchison added. Many opt to change smaller chunks while keeping core functionality intact. By the time they make discernible progress the technology and possibly the staff have changed, leaving current personnel to question the purpose.
Many end up partnering with fin-techs to incorporate software additions so they do not have to develop end-to-end solutions. It’s quicker to market and the bank receives software updates once available.
And that 25 percent of North American institutions not considering a switch? Ms. Hutchison said some are smaller ones who believe their existing systems suffice. Others have privacy and security concerns. Rapid change and uncertainty about the SaaS model are other factors.
Many of the holdouts are more comfortable with cloud-based solutions than their think as they do not realize Salesforce is one, Ms. Hutchison offered.
Another emerging trend is a move away from a singular focus on mobile functionality to multi-device connectivity, Ms. Hutchison said.
“The bank mobile app experience is different than they web banking app, which is different from the call center experience which is different from the walk-in one. Many talked about the omnichannel experience for a decade but I am not sure if they ever got there.
“People want to bank whenever they want wherever they want. Web, tablet and mobile channels are being made more consistent rate than separate channel restricted by real estate.”
While the front end experiences may look consistent, it could be the same old story in the back end where data provided through a twenty-first century experience is entered into technology that is so 1900’s.
The key is technology integration so partners can talk to each other, Ms. Hutchison said. If you’re working with Kabbage for example, the best experience is realized if both core systems can safely transmit data back and forth.
Another key development to watch is PSD2, the revised Payment Services Directive passed by the European Union in 2015. Its goals included the standardization, integration and improvement of payment efficiency, enhanced consumer protection, cost reduction, promotion of innovation, clarification on new technologies, the incorporation of new services under the regulation and the attraction of new competition.
Retailers can now ask shoppers to directly share their bank information, bypassing the bank and possibly several intermediaries. Banks will lose revenue, and spend significant sums on compliance. New players will get access (with permission) to personal data, enabling various cross-selling opportunities.
All happening while many legacy players struggle to keep up with the nimbler technological upstarts
“It will be quite stunning for banks to open their standards,” Ms. Hutchison said. “But it’s an absolute necessity because it does allow for the partnerships and integration needed for total solutions.”