COLUMN: Digital banking trends from the past year and what to expect in 2018
The following article is part of a series of articles from experts in different areas of alternative finance where they share their thoughts on top development in their area of expertise that occurred in 2017. They also look ahead to 2018.
As the world continues to become more digitized, and the capabilities of mobile devices continue to expand, 2017 has presented a host of exciting opportunities—and challenges—for the digital banking space. With customers expecting seamless digital experiences across all types of devices, banks are racing to improve their digital capabilities while guarding against the spectre of fraud.
Here are some of the key developments from the past year, and a couple of things to look forward to in 2018.
Developments in the past year:
Identity management has become a hot topic in light of multiple large breaches of personal information: The days when you could verify a person’s identity using only their social security number and other personal details are gone. High-profile data breaches mean that, in many cases, this information is no longer secure. Banks are concerned about the potential for rising fraud—and increased liability—as a result. To heighten their security, many have focused their attention on new identity techniques beyond the old “what you know” systems. That means a push to harder-to-crack biometric identification measures that provide a heightened degree of safety.
Mobile has finally reached parity with the desktop for account opening and conversions when comparing digital channels in some banks: Data gathered by Avoka from large retail banks in North America indicates that in mid-2017, the number of mobile applications caught up to the number of desktop applications. More significantly, the conversion rate for mobile was higher than for the desktop, demonstrating the importance of a well-designed user experience when selling financial services via mobile devices. The new data shows that the conventional wisdom—that consumers want to “browse, not buy” on their mobile devices—no longer holds true. Many banks that had focused on desktop applications are now taking advantage of features like pre-fill of identity information from a driver’s license photo or from the mobile provider to improve their mobile onboarding experience.
Banks with Commercial/Business banking products get serious about digital onboarding: Business banking products have lagged behind retail in their digital transformation as banks have lavished attention on improving their personal banking experiences. Big projects this year to move off of complex paper-based systems for enrolling in commercial banking products and gathering KYC/compliance data, though, show that banks are shifting focus to these often-neglected areas. With businesses expecting fully digitized banking processes, banks need to ensure that their entire product suites provide user-friendly digital experiences.
Everyone is looking at analytics and AI for an advantage, but few real AI applications have made an impact: Analytics and a deeper understanding of customer behaviour have helped banks tailor their products and improve the customer experience. While AI and analytics hold significant potential to alter the way banks—and countless other businesses—function, it remains uncertain exactly what their effects will be. The first concrete, customer-facing implementations of these technologies look to still be in the future.
What to watch for in 2018:
Biometrics will show up much more prominently in identity management: As banks look to improve security and combat the ever-present and constantly shifting threat of financial crime, expect them to increasingly turn to hard-to-foil biometric identification techniques. For example, matching a selfie to a driver’s license picture, and checking for movement to ensure that the user is live, not a photograph, will become more common.
The secure nature of phones will continue to propel mobile: Capturing encrypted identity information in a phone, and using that to drive applications and purchases for all kinds of products, will prove to be more secure than depending on identity data stored centrally (and often stolen by hackers). As their advantages over traditional systems become clear, mobile devices will lead the way in driving more secure financial transactions.