The rise and adoption of new technologies in everyone’s daily life is dramatically and irreversibly changing the landscape of retail banking. Banking customers are becoming increasingly self-directed, and expect their banks to deliver convenient yet secure ways to pay, manage their accounts, conduct simple operations and interact online to offer these services on all their mobile devices 24/7.
For banking players, this digitization comes with an imperative of cost reduction, while a serious cross-industry battle is happening for the positioning in digital payment services with non-banking players and ultimately for consumers digital identity and security gatekeeper .
More banks go digital
This digitization effort is very visible around the automation of banking services and fulfillment of payment devices, as well as the transfer of these services on the digital channels (phones, tablets, and computers)
While there will be a reward for those banks embracing the move to digitized processes (mostly on operational cost cuts), a risk of seeing customers adopt new digital services from other providers than their primary is well identified for those who are slow to respond to changing customer demands. In this context, “main street” banks role would be significantly disminished and value would migrate to more innovative (and efficient) providers.
While major banks have already started this digital transformation process and will continue on this path, we expect to see this trend extend to the bulk of other banks in 2015.
On-boarding new customers expands versus traditional branch services
2015 will see traditional physical in branch touch points lose ground to online on-boarding.
In addition, we also expect to see an extension of eBanking services such as loan contracts and account openings, resulting in an increasing need to authenticate the applicants and secure the transactions. All this to be provided in a “seamless” manner, the digital channel(s) being integrated across the various product lines, and ultimately the bank acting as an aggregator of services.
The battle of payments intensifies
Payment is amongst all banking services the one generating the most frequent and sensitive touch points between banks and customers.
Banks are the traditional incumbent players in the payment industry, but they are under increasing pressure from new non-banking players with innovative and convenient value propositions, challenging their prevalent position and redefining some of the revenue streams.
To counter these new competition s, 2015 will see banks put together comprehensive offers relying on a variety of payment means, from traditional cards to cross-channel digital payment propositions.
EMV is reaching a truly universal status
With the US market adopting EMV next year and China also pursuing migration to it, the standard for interoperability and security of in-store transactions launched 15 years ago, is now becoming globally recognised.
This universal adoption across a massive installed based sitting right at the heart of the banks payment offering means it’s their most valuable asset in this battle of payments – a position that will continue strengthen as adoption increases in 2015.
The contactless wave will accelerate
Most of the cards issued in China this year and next year are dual interface cards, and in many countries, these now outnumber traditional ‘contact only’ cards.
This massive deployment and adoption of contactless technology has paved the way for other ‘form factors’ (including the mobile hosted payment applications) and the emergence of payment through wearable technologies. As NFC continues to become more mainstream and new wearable devices come to market 2015 will be the year that more payments start to be made in this way.
NFC Mobile in-store payment will take off
2015 might eventually be the year when NFC mobile proximity payments take off, in the wake of ApplePay and HCE announcements this year. It’s clear that people are still getting to grips with the technology as research from InfoScout reveals highlighting that 95 per cent of iPhone 6 users with Apple Pay either weren’t aware they had it or didn’t use it. As Apple helps make NFC payments more mainstream however, the industry expects this to change quite dramatically in 2015.
In addition, we also expect more new initiatives will be revealed that will start to merge in-store payments and online cloud-based payments delivering a more consistent customer experience.
Mobile Banking and mobile commerce value propositions will become richer
As people become more tech savvy and user expectations increase – digital natives are starting to demand the same functionality across all their mobile platforms, with an equivalent level of usability and security as on traditional online channels. New services will also be added to the shoppers experience thanks to the interaction of geolocalisation capabilities on the mobile within the store premises.
Managing the diversity and fragmentation puzzle will become a new challenge
Managing and issuing payment credentials to multiple payment devices, with different form factors, different operating systems, different security frameworks in place, will prove to be an increasingly challenging issue for the banks in 2015.