5 minute read
2018 has been a momentous year not just for solarisBank, but for the banking and fintech industry at large. But 2019 is already in full swing and leaves us little time to dwell in the past. Thus, we’ve decided to take a look beyond the buzzwords and ask the Managing Directors of our business units and our CPO to give us their expert opinions on what 2019 has in store for banking and fintech. Here’s what they had to say:
Timo Weber, Managing Director Digital Banking & Cards
2018 has seen unprecedented growth in the number of mobile banking customers, both in Europe and across the pond. This begs the question of how this development will pan out in 2019.
How much value, if any, is there left to add?
Currently, mobile banking offerings differentiate themselves strongly from the incumbents with superior user experiences and attractive interfaces. Between each other however, mobile banks’ offerings have become a commodity. Every mobile bank nowadays can guarantee security and offer mobile onboarding, transactions and account management.
I’ve often heard the argument that there’s only a finite pool of young, digitally savvy customers, whom the mobile banks are fighting over with aggressive marketing campaigns. Once this pool is exhausted, those with the best user interface and the biggest budget will prevail, and there will be no value left to create for new entrants.
This view is however misguided, as it looks only at a snapshot of what is in fact a large-scale movement from branch-based to digital banking — a trend we will see continuing in 2019. To benefit from this shift however, incumbents and new entrants will have to do more than just offer a mobile clone of a current account. No, the value for those venturing into the digital banking market will be found in niches.
There is still plenty of room to grow in digital banking if you can create an offering that caters to specific lifestyles, values and needs. A bank account is just the door opener — if you want your customer to come back every day you need to build an ecosystem of services around the account that accommodate the customer’s specific needs.
If new entrants can identify and meet those niche needs, they will be rewarded with a greater customer stickiness and a higher willingness to pay — something that can’t be said of many other mobile current accounts.
Peter Grosskopf & Michael Offermann, Co-Managing Directors Blockchain Factory
After the massive party the crypto world celebrated in 2017, followed an equally massive hangover in 2018. Now, while the hype may have passed, it has certainly borne a multitude of promising ideas; and despite the fact that many of these ideas are not ripe yet for mass market implementation, they do represent feasible real-world applications of blockchain technology.
So, in a sense, 2018 brought the reality check from which we’ve distilled a viable image of what a decentralized economy could actually look like. What then, does 2019 have in store for the blockchain space?
2019 will be a year of laying the foundation for the missing elements of that decentralized economy. However, given the regulatory conditions, centralized elements (i.e. banks), will still play an essential role in the widespread practical adoption of crypto services. That is not to say the regulatory environment is hostile towards innovation. It provides the foundation for fair competition and protection of the consumer — conditions without which the development of crypto services wouldn’t be possible in the first place.
One of the key developments of 2019 that will require banks working hand in hand with the decentralized world will be solving the dilemma of squaring accessibility with security for crypto assets.
Any asset, from real estate to securities, can in theory be tokenized and traded on a blockchain. What is deterring institutional investors from investing in crypto assets on a large scale is the lack of a secure storage facility that simultaneously enables real-time trading. Institutional investors rarely want to hold their crypto assets themselves, since they cannot be retrieved once they get into the wrong hands. The role for banks in solving this dilemma is the same one it has held for hundreds of years. As a trusted third-party institution, it acts as a safe-keeper of value; be this gold, cash or crypto assets. If such custodial services can be combined with real time trading platforms, then institutional investment in crypto assets will become a real possibility in 2019.
Dr. Jörg Howein, Chief Product Officer
Whilst co-operations between tech companies and banks have been growing in scope and size in 2018, we were left waiting for a ground-breaking partnership to materialize for a few years now. That is, until Google and Apple Pay started launching their services across Europe. For some, this marked a seismic shift in the payment and banking industry. Others classed it as a harmless “nice-to-have” that won’t have much of an impact, especially not on the cash-obsessed German economy.
In fact, however, it was just the beginning of a trend that we will see fold out on a much larger scale in Europe and beyond. In 2019, digital players across a multitude of industries will reach the stage at which they are comfortable to complement their offering with financial services on a large scale. Why? With open banking coming into full force in September, and the first “banking as a service” providers reaching maturity, the regulatory and technical prerequisites are finally met for the Big Techs and their smaller cousins to enter the financial services industry with full confidence.
But why do tech companies want to enter financial services in the first place? With many more customer touchpoints than digital banks could ever dream of, it is far easier for them to monetize their customer base with financial services. An e-commerce shop could offer cards coupled with loyalty points, a travel platform could offer digital financing straight at the checkout, a social network could offer P2P payments — the list goes on.
The wealth of data already at their fingertips, coupled with the open source data available through open banking, allows digital businesses to better understand their customers and thus offer a new and superior banking experience. By integrating the financial service directly into the customer journey, one creates a continuous experience that is tailored to the specific context of the user. A bank account as a pure standalone product will become relic of the past, and that past may well start in 2019.
Delia König, Managing Director Identity
In light of last year’s reveal of what may be the biggest money laundering scandal in history, banks and regulators had to face the fact that even despite modern AML and KYC regulations, the fight against financial crime has not been won yet. This sobering realization comes at the same time as an exciting shift from analogue to digital banking. With bank branches closing by the dozen every day, getting to” know the customer” is no longer taking place in the physical world, but in the digital. The user experience has taken center stage in this shift, not only in consumer banking, but also increasingly for businesses banking; and the onboarding process will remain a key component of this experience. After all, you never get a second chance for a first impression.
Adapting to this change whilst staying compliant with local regulations that are largely offline-focused is challenging for traditional banks and digital financial pioneers alike. Thus, the key objective for 2019 will be to square an impenetrable KYC process with a first-rate digital onboarding experience — without having to make compromises. Advancements that have been prophesied for 2019 such as the widespread adoption of machine learning for fraud detection will be conducive to creating such a seamless and secure onboarding experience.
This becomes increasingly important against the background of conversion-optimized industries ranging from e-commerce to telecommunication looking to augment their offering with financial services — a trend we’ll see continuing in 2019. They are new to KYC and AML regulation yet their customers expect convenient and speedy onboarding — and the KYC process won’t be an exception. Thus, we can expect regulators, banks and digital companies to move closer together in 2019, in order to find solutions for these pressing challenges.