Rolling updates from the Temenos Community Forum in The Hague. It's a full house in the World Forum after a splendid gala dinner last evening. News and insights shared here on a continual basis throughout the day
16.36 It's been a fantastic two days at TCF. Temenos and partners are keenly focused on reducing the costs of software deployment in order to accelerate the speed of innovation. And innovation is a rolling continuum, not some bar to reach and then sit pretty. It's a highly resonant message, whether Temenos provides the system or not.
There's been talk of the future with, for once, some fairly clear (and very positive) outlooks. On open banking, David Bannister, Principal Analyst, Ovum, summarised: "It's a game-changer but that doesn't mean banks have to lose the game." This of course is true of disruption and competitve forces in any form across the industry.
AI and Machine Learning will continue to greatly facilitate both cost reduction and incisive data capture and analysis, informing more attuned business decisions and models. And the executive sponsorship seems to be there, too. So we'll look forward to next year, to see how much further developments have come- especially keen to track progress in the SME space.
15.15 Given the question of how open banking will have shaped the landscape by 2013- general consensus is 'sizeable impact'- towards 'Game-changer', where banks remain key players, however not dominant. Revnues stable at best with much tighter margins. It's a game changer but you don't have to lose, as one analyst delegate put it.
15.11 The EU Commission is talking about instant payments at the point of sale, and the elimination of cards. A gradual shift, more cloud-based solutions.
Most banks still have a hybrid set-up, with payments in the cloud, and core on-prem, one of the key challenges is how to combine the traffic between the two. Being cloud-agnostic is also a constant question from banks, says Temenos Payments' Product Director.
Competition between banks and so-called big techs: Big techs don't have the richness of data that banks do, says Lodge. As TPPs, they can connect in but they can't get context around the data points. However, there could be partnerships and collboration between banks and big techs. The latter don't necessarily want to be regulated entities in the way banks are, and there could be mutually beneficial business models created.
14.42 Drawing to a close now with a payment session- New payment paradigms for an open banking world. Gareth Lodge, Senior Analyst, Celent presents a short-term outlook on payments transformation.
The impact of open banking will permeate the payments industry most:
Quoting BCG- Payments represents 25% of revenue; 33% of costs.
Quoting McKinsey, which estimated US payments industry is greater than the US airline and US hotel industries combined.
Despite all the regulation and competition, it is growing. Investment into fintech over the last decade, payments is the largest both by value and payments made. "The barbarians are at the gate, and are expensively armed as well".
Payments account and payments data were the last two things banks had, and they are now being taken away through open banking. Some organisations have started placing very large bets on the way things are going to go and the shape of change to come.
12.54 Future outlook for banking in next ten years from the EIU retail banking survey panel:
- Friedman- Increased authentication protocols, and issues resolved around who owns what data
- Dunn- Customers will take ownership and control their interactions- distributed identity ledgers so as not to go through regulated processes each time
- Hope- Quoting McKinsey re blurring of boundaries- there will be a rise of twelve different consumer banking strategies on a unified platform, and the financial services are secondary to the lifestyle need- they are subsumed by lifestyle services
- Munter- Smart assitants, from log-on through entire journey.
12.30 The panel discusses the Economist Intelligence Unit's annual retail banking survey report with a view to open banking.
Nordea's COO, Simen Munter says Nordea has around 3000 devop'ers in Nordea sandboxes. For us the underlying platform strategy is very sound and very important, although it is not happening fast. If you believe in a chatbot virtual assistant future then you need to have the API infrastructure live and ready to go.
Customers need to be educated about open banking, says Robert Dunn, Head of Operations, Volt Bank, Australia, however, it can't be pushed until there are applications they can get value from, says Nordea's Munter.
12.25 No surprise that technology is rated higher as a challenge and priority this year, says Kanika Hope, Global Strategic Business Development Director. Cloud provides better security for AI, AI supports blockchain.. these tools are mutually supportive.
Regulators are incresingly concerned with how organisations adopt these technologies
12.16 Some overarching highlights from the EIU annual retail banking survey. The changing retail banking view- this year, regulators will tighten cyber security authentication protocols and banks will rely more on the private cloud.
By 2025 having an open banking strategy is going to be dominant- not without challenges- unsurprisingly around how data is used and educating customers on data security. third party relationships will be limited. Cyber security is the biggest investment coming through- 39% cited as biggest.
- Banks are looking to AI to help with security. improve cust ecperience is 20% and fraud detection is 14%
- 61% believe that by 2025 AI will create better value for customers
12.00 Top strategic priorities for retail banks- priorities that spiked in previous years and not so much now, probably due to banks being more holistic in their view, says Renee Friedman, Managing Editor, Economist Intelligence Unit, EMEA. Mastering digital marketing and engagement remains very important- talent acquisition is key too.
-Interstingly by 2025 the top strategic priorti is in open banking strategy so although this is not a global theme yet, it is on everyone's mind.
- A rise in threat from payment players
- A rise in telco threat. threat from ecommerce will not be going away any time soon either.
- The EIU surveyed 405 banking execs globally- over 50% c level execs to find retail banking trends, challenges, opportunities and strategies and where are making investments now up until 2025.
-Changing customer behaviour and demand was at a peak last year, now is integrated
-Emerging regulation on digital technologies in terms of data protection and digitsation- things are flattening but this may may be because banks are seeing things in a more connected way
11.23 CIO of ISRACARD credit card and TPP payment company in Israel, and the first credit card company to utilise T24 Transact to introduce origination, KYC, onboarding, 'needs' analysis, talks of innnovation experience. "It's important to be an early adopter but get the help you need in the right places."
- Engage
- Leverage data to engage
- Evolve to remain relevant- transform infrastructure and culture
11.12 The message here is end-to-end capability, renovating the back office in due course. Focusing on the mobile banking app, which displays and categorises spend and income, these can be laid out in different ways, as well as the capability to apply for products, and of course viewing other organisations' accounts with the open banking capability.
10.52 The Innovation Think Space discussed The Super App, a concept already in the market in Asia through Ant Financial- this could target and service the SME market.
5G- speed and ability to drive heavier, richer, more emotional content; IoT- what are the right use cases for this connected world in banking? These themes are open to proof of concepts for Temenos partners in the next year.
10.40 How to interact with fintechs? How to keep my customer secure? How to leverage cloud? Acquire and retain customers? These are the questions being explored in this Infinity session.
Innovation Think Space- Kam Chana shares outcomes from the pre-TCF working group. Banks need to change daily, she says. The key to understanding the mindset that drives the kind of culture that is required to be truly customer-centric, getting out of corporate thinking.
- what business model?
- what market?
- what technology?
- what customer?
Financial health check was a theme that came out as a popular one that banks wanted to improve for their customers. Gamified financial health check concept grew out of this, and using behavioural analytics to nudge the customer in the right direction after the bank having improved their understanding of the customer's goals.
10.00 Helena Barrett, Davy Group shares some of the key 'wants' for the digital onboarding journey: 10 min opening, 2% error defect rate, exception rules reduced to below six
Armed with the digital wishlist, they went off to find a partner, criteria for which included flexibility and speed, expertise of team, AI/RPA capabilty, real time user feedback, integration and tracking
9.45 Aligning the customer journey in banking. Research was conducted into how customers apply for a product, and how easy it is. Thirty-one per cent of the banks surveyed in 2016 had digital , now it is 76%. The Effort Score was applied to various banks' onboarding processes. Findings are shared in a digital banking report, launched today.
Fifty per cent of all kinds of accounts can now be opened on mobile, compared to two years ago when only half the accessibility of online desktop channels was available through the mobile channel.
Interesting conversion rates being shared. Feedback regarding abandonment included children throwing up, phones having to be answered- 40% turned into borrowers after a call picked up on the saved application that they didn't realise was saved.
Another top tip- ask the tough questions last. Not as obvious as it sounds.