Mega Trends in Banking IT                                                 1/2012


Highly visual, haptic presentation technologies, mobile devices that are linked to social media, standard banking software and flexible workflow systems and new dynamic and biometric security technologies are mega trends in banking IT, which will change dramatically the way bank customers do their banking business or how banks produce.

What is a mega trend in banking IT?

A mega trend in banking IT fundamentally changes the way bank customers do their banking business or how banks produce. – These changes do not happen overnight, but over a period of several years. For example, over the last 15 years the Internet has changed the way we do our daily banking business. By now more than half of all bank customers check their account balances or transfer money online from home, independently. And self-service machines at the entrance of bank branches have replaced human cashiers. An entire profession has been virtually eradicated.

Therefore, for bankers and banks it is of particular interest to know the trends of the next few years.

I currently see four mega trends in banking IT, which will lead to lasting changes in retail banking:

1) Highly visual, haptic presentation technologies

To regain the trust of customers banks will design their branches in a way that a bank visit
becomes a positive customer experience. In addition to the architectural redesign of branches banks will make use of new, highly visual, haptic presentation techniques and technologies. With the help of these technologies different financial scenarios of the client’s future can be represented and simulated in an easily understandable way. Bank advisors and clients jointly develop measures to improve the client’s finances. Samsung and Microsoft are offering such a device that is already tested by Deutsche Bank, Barclays and BNP Paribas.

2) Mobile devices linked to social media

Mobile d
evices and social media have become indispensable in our lives. The simplicity of today’s mobile banking (limited to account overview, money transfer and branch and ATM finder) will disappear. In future we will pay with our mobile devices, rent cars, borrow and invest money. All this while making use of location-based information at the point of sale linked to social media. For example, the American company Square could already win more than one million retailers for their new mobile payment system.

3) Standard banking software and workflow systems

The financial crisis will increase the current cost pressures on banks. Often banks still operate with hand-made, outdated and inefficient software that produces a lot of paper and even more manual work. Today's banking manufactures will automate more and more processes in the next years. In the future banks will replace their legacy IT landscapes with standard banking software and flexible workflow systems. In 1985 Ulrich Catellieri, former member of the board of managing directors of Deutsche Bank, has spoken about the industrialization of the banks. By now technology is mature enough to transform this idea into reality. These thoughts may have contributed to Deutsche Bank’s plan to transform BHW bank into a credit factory.

  1. 4)New security technologies

The digital wo
rld, which occupies more and more space in our lives is not spared from crime. Simple security procedures of the last 15 years based on PIN and TAN are no longer sufficient. In the next 10 years dynamic and biometric methods and technologies will increasingly be used to fight fraud. As soon as the regulators allow biometrics methods, we will authorize cash withdrawals from ATMs highly convenient with our hands by means of "vein recognition" and not by means of deposit card and PIN.

Banks alone will not be able to transform these mega trends into tangible Banking IT innovations with high customer and shareholder value. It will mainly depend on the ingenuity and creativity of the technology providers.

Frank Schwab

FinTech Forum