Novelties in the banking sector. Current trends in the field of banking innovations. Banks continue to invest in and create new projects using distributed ledger technology
Independent expert in the field of financial technologies, author of the book "Digital Bank" ("Digital Bank"), head of the European network of forums uniting representatives of the world of finance and technology, Chris Skinner, the main trends in the banking industry. He described in detail the steps that banks have already begun or will begin to take in the near future to adapt to the new digital era:
10) Data monetization: banks are already well aware that they have a large amount of data about their customers: habits, expense items, interests, and so on. This information has not been used in any way until recently, but the picture is beginning to change. The analysis of all customer information can serve to develop more personalized products and partnerships with third-party players who can get customers focused purely on their products or services.
9) Active social interaction: representatives of the banking industry want to better understand the desires of their customers, which has given rise to the trend of outsourcing banking ideas to customers who are given the opportunity to design and describe the banking products they are interested in. One example of this approach is the Italian bank Widiba.
8) Financial services robotization: Robotic investment advisors are just one area. UBS already offers real-time capital analysis services to high net worth clients using IBM's Watson supercomputer.
7) Banking things: The birth of a new finance direction is similar to the way the Internet of Things works. Electronic wallets linked to a client's account will be embedded in cars, refrigerators, light bulbs, and so on. Cars will be able to automatically pay for parking or pay for gasoline without human intervention, smart bulbs will pay for the consumed electricity, and the refrigerator will pay for the order of products, and all this will be tied to the customer's account.
6) Consulting to the next level: today banks can not only remind you of your friend's birthday, but also recommend a gift based on an analysis of his account preferences and the possibilities of your income. At the same time, the analytical platform will tell you where you can buy that other gift most profitably. Banks know what we buy most often and will be able to give really relevant advice. You no longer have to puzzle over what to give a friend for a particular holiday.
5) Wearable payment devices: How about a payment wearable device like a status symbol? You can simply showcase your bracelet, pendant or branded pen, which will allow you to pay for purchases with a simple touch to the terminal.
3) Targeting small and medium-sized businesses: earlier banks did not like small businesses because of the high risks of such borrowers, today, thanks to partnerships with fintech startups, banks get new opportunities for scoring entrepreneurs and can afford to revive this huge layer of potential clients.
2) Work in style 24/7: banks are increasingly moving away from the traditional work schedule towards the possibility of constant access of clients to the services of financial institutions. Services such as WeChat, Facebook Messenger, Google Hangouts, Whatsapp and so on are actively being introduced to enable constant communication with customers.
1) Customization: Today, with the development of API technologies, almost any service can connect to the payment banking infrastructure or integrate new capabilities into its own platform. This creates new options for collaborating with customers.
CEE economies and banking scenario
Macroeconomic environment extremely favorable for CEE countries
On a global scale, 2018 is the ninth year in which the economy grew by 3.5% or more. This has not happened since the 60s. The observed economic growth in USA during these nine years also became the second longest in history (after the economic recovery that followed in 1991). At the same time, there has been significant economic growth in Eurozone covering all countries in the region. Economies of countries CEE after the crisis, it is growing at an unprecedented rate, such a rate of economic growth has not been observed since the 1980s. In 2017, GDP growth in CEE countries averaged 3.7%, or 4.6%, excluding Turkey and Russia.
In 2018, the UniCredit Group projects sustained economic growth in CEE with a GDP of 2.8% and a slight cyclical decline thereafter. Growth will be driven by domestic demand (consumption and investment) and will average 4% in many countries - including Hungary, Bulgaria, Romania, Slovenia, Turkey and Slovakia.
Increased lending in CEE (excluding Russia and Turkey)
In terms of lending dynamics, as well as financing and credit quality, the CEE banking sector is more stable and stable compared to previous years.
Lending in CEE will continue to grow, in particular in the CEE region (Central and Eastern Europe, excluding Russia and Turkey), which will contribute to positive economic growth trends of up to 5% for three consecutive years (2017-2019), followed by a slowdown in 2012-2016.
In 2018, lending in the CEEC will match the growth of deposits - for almost the first time in ten years. This gives rise to hope that the priorities of this economic region will shift from savings to investment. This is confirmed by the data on deposits, the growth of which peaked in 2017, followed by a projected slowdown at present. At the country level, the highest lending growth rates in 2017 were recorded in Turkey (20.7%), Slovakia (9.9%), Bosnia-Herzegovina (6.5%) and the Czech Republic (5.7%). We forecast a slowdown not only in economic growth, but also in credit growth in these countries, with growth rates higher in countries that lagged behind earlier in 2017, in particular Croatia and Serbia.
Since 2011 the coefficient the ratio of bank loans to deposits in the banking system of CEE (with the exception of only Turkey and Slovakia) fell sharply below 100%, which means the self-sufficiency of most CEE banks. In addition, there is a significant proportion of short-term "frozen" deposits - both from corporations and individuals, who are not currently investing in long-term instruments, waiting for new opportunities.
In terms of credit quality, economic growth in recent years, along with bad loan assignments and improved debt collection, have contributed to a decline in problem loans ratio, which played a role in increasing bank profitability. In ALL CEE countries the volume of problem loans will be less than 9%, with the exception of Russia, and in Hungary, Czech Republic, Slovakia and Turkey - less than 5%.
Introduction of digital and financial technologies in CEE countries
CEE countries are well equipped for new digital technologies
Digital infrastructure - the level of penetration of cellular communications and the Internet - in CEE is developed in the same way as in more developed countries. Cellular penetration rate in most CEE countries more than 100 (one mobile subscription per person), while the level of use internet exceeds 60%.
Demographic trends the region is also fueled by an intensive digital development, in which the young “digital generation” - the so-called millennials and “Generation Z” in the economy - are increasingly playing a significant role - as almost 50% of the population of these countries is under 35 years old, while in Western In Europe, this figure is 40%.
Digital banking in terms of individuals using the Internet for banking transactions, CEE is developing rapidly - in particular, this is happening in the Czech Republic, Turkey and Serbia, where the number of digital banking users has doubled since 2010.
Boom in the fintech sector in CEE in recent years
This study by the UniCredit Group, the first of its kind to provide a detailed picture financial technology sector in CEE, confirms its boom in CEE countries. The study focuses on the period from 2012 to 2016, which cannot be compared with previous years in terms of the number of companies opened.
According to the Tracxn database, more than 600 fintech companies. More 50% of these companies operate in segments payments and transactions or financing, including in lending between individuals or crowdfunding, while 12% companies are engaged investment and asset management(trading platforms, automated consulting, personal finance analysis, etc.). The rest of the companies occupy a large segment of activities in the field of cryptocurrency, cost accounting, insurance (aka InsurTech), risk management and fraud prevention.
Of all the countries in the CEE region, the lion's share of fintech companies is in Russia, followed by Turkey, Bulgaria, the Czech Republic and Romania.
Key data on digital technologies in CEE:
- In most CEE countries, cellular penetration rates are above 100 (one mobile subscription per person). The gap from Western Europe was bridged ten years ago.
- Internet usage is over 60%.
- Demographic trends are accelerating the development of digital technologies in CEE: the young (“digital”) generation plays an increasing role in the development of society and the economy: almost 50% of the population is under 35, in contrast to Western Europe (40%).
- CEE fintech boom in recent years: There are over 600 fintech companies in the region, according to Tracxn. More than 60% of them were founded between 2012 and 2016.
- Two thirds of CEE fintech companies are active in the following sectors: 1) payments and transactions, 2) financing, 3) investments.
“Favorable conditions of the world market contributed to the development of fundamental macroeconomic and banking factors in the CEE countries, which are quite powerful today. Given the high number of mobile and Internet users, favorable demographic trends and high rates of development of digital technologies, the region is ready to concentrate all efforts on digital banking, which is increasingly featured in traditional macroeconomic and banking analytics, ”notedMatteo Ferrazzi, Coordinator, CEE Strategy and Forecasting Unit, UniCredit.
Sources: IMF April. IMF State and Outlook on the World Economy, World Bank, Central Banks, UniCredit Group Q2 2018 Quarterly Forecast for CEE, Strategy and Forecasting Unit UniCredit Group, International Telecommunication Union, Eurostat, marketing materials, Tracxn.
GroupUniCredit in CEE: the digital path
With its innovative approach, CEE is an excellent testing ground for new digital and IT solutions.
The digital development of the UniCredit Group aims to improve the customer experience through a multi-channel and multi-country customer approach based on all digital touchpoints. The development of digital processes also improves the quality of consulting services and allows us to predict medium-term changes and the needs of our clients, including their use of multiple channels. Our investment in digitalization is focused on improving the customer experience while continuing to optimize our processes and our baseline value.
This digital journey is primarily focused on understanding customer needs in order to improve service quality and continuous value creation. The UniCredit Group implements common platforms offering cross-country solutions applicable to nearly 45,000 corporate clients.
We launched relevant transformational programs, in particular those related to innovation and digital technologies, which led to a steady growth of the digital client base in CEE.
Our “digital journey” continues, allowing us to develop and seek new opportunities in new countries, reaching more and more clients. Further strengthening our analytical capabilities will assist account managers in their day-to-day activities to increase market reach and cross-sell growth.
GroupUniCredit ranks first in the overall ranking of the top five companies in CEE, - noted Carlo Vivaldi, Head of CEE in the GroupUniCredit. - We strive to continue to maintain a strong leadership position in the region, achieving planned and stable organic growth in revenue and customer base. It will primarily be driven by the adoption of digital technology and innovation, which, along with more effective credit risk management and cost planning, will contribute to increased profitability. "
“CEE countries represent an ideal market for the development of digital banking. The development of digital technologies is not a new idea, but we are sure that it is necessary to pay attention to the CEE region and its potential opportunities, especially in the banking sector. Our unique network in CEE represents an excellent opportunity to complement the existing financial and market environment in CEE with a ready-made digital banking solution ”, - added Andrea Diamanti, Head of Corporate, Investment Banking and Private Banking.
APIs, artificial intelligence, more convenient mobile banking, new forms of secure authentication and the Internet of Things will help banks modernize technology.
While analysts in the financial sector are debating whether Amazon will start banking, it is clear that the banking market itself is in a state of uncertainty when it comes to technology.
Of course, mobile banking itself is not something entirely new. But today this technology is a prerequisite for the bank's clients, primarily for the younger generation. This is the absolute minimum that all banks have to reckon with. Experts and analysts agree that banks that do not have a reliable mobile application are outsiders.
This will soon take shape on a host of new and emerging technologies, as banks are pushing to keep up with tech companies like Apple, which this month introduced Apple Pay Cash, a service that allows users to send and receive money. funds through the Apple Pay mobile payment system.
“Responsible decision makers are guided by the idea that mobile technologies are gaining a dominant position, and the market is gripped by the trend towards digitalization,” says Chris George , senior vice president in charge of developing customer engagement strategy at NYMBUS, one of the key players in banking modernization.
Next year, the banking sector will be mainly influenced by 5 technologies:
1... Banks will expand services with external APIs
Banks have used APIs for many years, but APIs — software intermediaries that connect and run applications, including mobiles, with back-end office systems — will increasingly be used to provide new services. As noted by The Financial Brand, APIs "provide opportunities for innovative, contextual solutions that would have little chance without open banking."
By the end of 2018, 50% of the world's Tier 1 and 2 banks will offer at least five external APIs, according to consultancy IDC. Banks are increasingly partnering with fintech companies through open APIs. This will be partly due to the requirements of the regulatory authorities.
“New regulations governing banks, such as PSD2, which oblige banks to provide access to customer data, also facilitate collaboration, especially through the APIs that are used to provide access to such data,” says Capgemini in the report. on trends in the banking industry in 2018. "Regulators welcome initiatives that ensure that banks operate in an open format, and banks have to use APIs to open their systems to third parties, giving them access to information about the status of accounts, and allowing them to initiate payments."
Capgemini notes that banks "have an urgent need to innovate as quickly as possible, but have not been able to achieve much digital innovation using only internal resources."
The company's specialists note that banks and financial and technological companies, enterprises looking for ways to introduce new types of technologies, need to cooperate to achieve their goals. Banks are looking for new approaches to digital innovation, while fintech companies need "capital, scale, data, customer trust and regulatory support."
Marc DeCastro , head of research in financial analysis at IDC, says open APIs can help banks "provide customers with a more flexible and better experience."
Over the past five years, financial technology companies have gone from competitors to banks to their partners.
According to de Castro Banks still seek to control the digital experience of customers, especially in the context of protecting their brands. However, to control it, credit institutions will need to open access to their servers through the API.
2. Mobile banking will become less problematic
Mobile banking can no longer be classified as a fundamentally new technology, but it will become easier to use and provide users with more functionality.
Kirk Borne
, Lead Data Scientist and Executive Consultant at Booz Allen Hamilton, told The Kirk Borne Financial Brand that consumers will increasingly choose mobile banking over standard banking as their digital, user and customer experiences become more perfect and informational. This implies smooth digital banking interaction between consumer and business, payments between consumers in one click, new opportunities related to cryptocurrencies, biometric authentication systems that do not require entering a password, services and offers tied to geographic location, as well as dialog interfaces.
According to George The fact that Apple has become a direct peer-to-peer payment service will force banks to improve the quality and ease-of-use of their mobile offerings. He believes that banks need to keep up with others when it comes to mobile applications and services.
“Banking is what everyone is doing today - George repeats a common phrase in the industry. "It's not the end goal anymore."
Banks must offer apps and maintain their online presence to compete with other players' easy-to-use offerings, he said. It is no longer enough to offer ordinary applications. "
3. Artificial Intelligence Improves Customer Experience
Artificial intelligence will help banks automate processes and improve the quality of customer service, claims Mitch Siegel, Director of National Financial Services Strategy Development and Transformation, KPMG Consulting Company, in an interview with American Banker.
“We're seeing organizations begin to dramatically simplify processes with intelligent automation, which in turn is helping to expose corporate data that has traditionally been hidden deep in complex underlying systems,” says Siegel.
“Organizations have traditionally offered products and services to large groups of customers who were approached in the same way, but who actually had significantly different buying habits, motivators and satisfaction factors,” continues Siegel... "With data, it becomes possible to create services and experiences that take into account the characteristics and needs of each individual."
In the opinion de Castro, it will not be possible to completely replace a person, and in the near future one should not expect banking systems fully controlled by AI. However, AI will help automate similar processes and can improve customer service with chatbots.
Experts and Capgemini argue that robots are 50-90% cheaper than using full-time and freelance workers, and that banks will invest more and more in AI in an effort to improve their efficiency while maintaining a high-quality customer experience. “There has been an increase in demand for cost-effective operations while delivering exceptional levels of service at lower costs,” the company said.
George adds that in the next two or three years, banks will introduce AI into their applications. In the near future, he said, when users are wondering if they have enough funds for a sumptuous Saturday night dinner, these apps will be smart enough to know the answer is yes, as on Fridays users get some of their salary.
4. Biometric systems will increase the level of security
Security has always been a concern for banks, and nothing will change significantly in 2018. Banks will look for ways to add new levels of security to their services.
IDC predicts that spending on next-generation authentication methods will grow by 20% in 2018. This is due to the desire of banks to gain the "digital trust" of their customers.
De Castro claims customers are getting better at fingerprint authentication of payments on smartphones. Banks will promote the same attitude towards facial recognition and voice-based user identification systems. With more and more passwords for customers to remember, biometric authentication systems will help simplify security procedures and provide more reliable identity verification methods.
“Banks will use anything to prove I'm who I say I am, if it's as easy as using fingerprints, facial recognition and voice-mode identification,” says de Castro.
5. The Internet of Things will be used on a small scale
De Castro believes that in 2018, banks, as before, will not look closely at the Internet of Things without much interest. There will be more concept studies next year, in which banks will test IoT technologies in a number of high-traffic branches. According to him, banks need to see how customers will react to sensors in such branches: "I think if everything is done correctly, this will mean empowerment that can improve the overall level of customer service."
In the world of modern communications, banking technologies occupy an important place. They are a collection of information and telecommunication technologies.
Banking technologies include specialized computer programs, internal procedures and various models related to risk management. An important role in this entire system is played by means of protection. For this, as a rule, cryptographic methods are used. In addition, in the field of financial institutions, great importance is attached to security, including in relation to the information component. For this reason, a variety of technical means are actively used to promote reliable protection of databases, as well as ATMs and cash registers.
Modern banking technologies
The financial stability of banks is ensured by a balanced monetary policy. To gain the loyalty of account holders and expand the client base, modern banking technologies are being introduced. The term characterizes a set of methods for analyzing the activities of an organization that contribute to an increase in material stability, effective interaction with customers.
The implementation of information, documentary, computer technological innovations ensures the optimization of the work process, allows you to organize an effective dialogue with the client. By investing in the development of funds to improve service services, modern large banks are expanding the geography of their services, which contributes to the growth of consumer loyalty.
To maintain overall competitiveness, banks are developing new models for analyzing risk factors and the level of investment attractiveness of projects. The content of banking technologies is considered as a set of actions that ensure the organization of service that meets the needs of the client, maintaining the competitiveness of the institution. Views:
- informational (documentary, operational, object);
- visualization (video communication with the client);
- communication (IP-telephony);
- electronic (internet banking, payment acceptance systems).
The use of remote service, which allows to carry out almost any operation, further strengthens the position of the structure.
Analysis of the development of banking technologies in Russia
Modern models of credit and financial activities of banks are complex solutions that optimize the work of structures, improve the quality of service. Analysis of the development of banking technologies in Russia makes it possible to identify areas where the positive dynamics is most obvious:
- remote service;
- card products;
- computer software systems.
Bank-client remote banking services for legal entities are provided by 76% of Russian commercial establishments. Corporate DOs are provided by 31% of institutions. For individuals, the figure is 87%. Analysts note the highest rates of development of card products in the salary segment. 92% of Russians use such services. Every third person has a credit card.
Banking information technology
Using banking information technologies, institutions organize an effective document flow, establish effective interaction between specialists from various departments. Types: object, documentary, operational.
By developing the information model of the bank's activities, they find a compromise solution that ensures the achievement of the goals of the institution and the satisfaction of the client's needs. Automation of workflow, formalization of the structural diagram of the work of employees of departments lead to a decrease in labor costs. Optimization of the workflow ensures the improvement of the service delivery system, which leads to an increase in the number of customers due to the availability of numerous convenient services.
Implementation of new banking technologies in Russia
Thanks to the staged process of changing the principles of interaction with clients, most credit institutions today provide a comprehensive service: remote service, profitable card products, mobile banking. Increasing competitiveness will ensure the use of video communication, which improves the level of remote services, and the further development of such systems with the expansion of the list of available services.
The development of effective commercial solutions in most banks is carried out based on the experience of world participants in the credit and foreign exchange market. The introduction of new banking technologies in Russia is hampered by the lack of its own analytical departments and qualified employees capable of creating effective financial models and adapting solutions proposed by Western commercial specialists.
Additional banking services
Depending on the specialization, open areas of activity of banks, in addition to the main list of services, they provide additional banking services to clients. For each category of persons, a list of additional. service is different. Legal entities and individual entrepreneurs may be offered measures for the convenience of maintaining international agreements, carrying out foreign exchange transactions, conducting operations with securities, and others on behalf of the client. Individuals can count on the automation of a number of operations, execution of transactions in financial markets, assistance and advice from specialists in the fields of investment, analytics.
Additional services of banks are voluntary, they may relate to proposals for issuing an insurance policy, issuing a larger amount for related expenses, anticipating the client's actions, being one step ahead.
Advice from Compare.ru: modern banking technologies find their effective use in the activities of each participant in the Russian banking system. They allow to improve the process of work of credit and financial institutions.