In a matter of years, the use cases for chatbots have increased dramatically going from only being capable of completing very basic tasks, such as answering FAQs, to initiating actions on their own. Consequently, chatbot technology is likely to completely disrupt the way banks interact with their customers which will have a tremendous impact on the way banks operate. In fact, Juniper Research estimates that the operational cost savings from using chatbots in banking will reach $7.3 billion globally by 2023, up from an estimated $209 million in 2019. Additionally, it is expected that there will be a growth of nearly 3,150% in successful banking chatbot interactions between 2019 and 2023, while Gartner predicts that by 2020 consumers will manage 85% of their total business interactions with banks through FinTech chatbots. Thanks to advances in chatbot technology, banks will be able to streamline their operations, reduce service costs, improve their customers’ experience and be able to serve more people, more quickly.
In recent weeks, we have heard a great deal about Facebook’s new digital currency Libra with London FinTech Week making the case it is energising the blockchain and FinTech scene. This may well be the case as blockchain continues to gain momentum across banking and financial services sectors and looks set to be one of the most disruptive FinTech trends moving forward. This is echoed by the fact the financial services industry was found to be spending about $1.7 billion per year on blockchain last year, however, the International Data Corporation (IDC) predicts this figure will increase to $11.7 billion by 2022.
One in ten banks and other companies are now reporting blockchain budgets in excess of $10,000,000.
Further research from Greenwich Associates revealed that one in ten banks and other companies are now reporting blockchain budgets in excess of $10,000,000. Additionally, it found that the typical top-tier bank now has about 18 full-time employees working on the technology. These figures are substantial and are expected to rise as blockchain technology gains more traction. As its adoption increases, it is likely banks and financial services organisations will focus more on how they can use blockchain technology to reduce operational complexity, streamline efficiencies and find a competitive advantage.
Advances in Mobile Banking
Increasingly, small businesses are demanding the same mobile interactions they get from their personal banks with research from Fraedom finding that 95% of commercial clients bank digitally in their personal lives. As a result, commercial banks are beginning to invest in key technology areas to make consumerisation possible. This is a trend that will grow as more commercial banks expand their digital offering to allow businesses access to a greater range of mobile banking capabilities.
According to London FinTech Week, the trend of financial institutions partnering with FinTechs will continue to develop, with Fraedom finding that more than 84% of commercial banks in the UK are considering new FinTech partnerships this year. There are a number of drivers for this, such as improving customer experience, speeding up digital transformation, better cash and card management and cost savings. Partnerships with FinTechs are not only enabling banks to implement the right technology, but they are also helping banks to better understand the consumerisation of business processes and technologies.
84% of commercial banks in the UK are considering new FinTech partnerships this year.
As the financial sector tries to get to grips with the new wave of regulations being introduced and the FATF prepares to roll out new rules to increase the compliance requirements on cryptocurrency exchanges, regulation was unsurprisingly a hot topic at London FinTech Week. However, where regulation may once have been seen as a barrier to the FinTech market, there is now more positivity associated with it in part due to PSD2 and the introduction of Open Banking showing regulations can actually be instigators of innovation. While we can’t say all regulation will have the same impact, it has certainly highlighted that the financial services sector must prepare for their introduction so as to be able to manage their influence.
As the financial services sector gets back to normality after London FinTech Week, it’s vital that they apply the learnings from the event and capitalise on these trends. With technology at the heart of many of these developments, partnering with FinTechs will be instrumental in helping banks to make the most of them, allowing them to improve their customer service, develop the more modern offering that society now expects and stay at the forefront of developments within the industry.