With 2015 drawing to a close, while bankers are wrapping up year-end projects, they are also planning for 2016 and beyond, making a list of strategic items to accomplish in the year ahead. It’s fitting, then, that we pause to reflect on the ways in which technology has evolved recently—and what’s to become of bank technology in 2016.
It’s an exciting time in the world of fintech. Technologies and strategies that we’ve been exploring for years—EMV, mobile payments, branch transformation and an omnichannel delivery strategy—have reached the tipping point where they are no longer just concepts. These ideas are now achievable, making 2016 the year of implementation. Conversely, new technologies like blockchain are quickly emerging, offering new focus areas for bankers.
With that in mind, here are a few fintech predictions and trends to watch for in 2016:
EMV becomes more commonplace.
October’s liability shift has set the EMV wheels in motion. Banks are issuing EMV chip-enabled debit cards, and merchants are enabling more terminals. In 2016, banks will be gradually replacing magnetic stripe-only cards with chip cards, while merchants will be plodding through the more than 10 million point-of-sale terminals that must be qualified to accept chip cards. The result will be a win-win, as POS fraud has been reduced by as much as 80 percent in other countries as they have rolled out EMV. However, POS EMV is not a panacea, and bankers must be aware that fraud is likely to shift to card-not-present fraud, or in other words, online payments.
What this means for bankers: It’s time to start issuing EMV chip cards, so develop a plan if you haven’t already.
Branch transformation becomes possible.
Another popular concept of the last few years—branch transformation—is also becoming a reality. Banks now have strong technology options that can help enhance branch operations. For instance, secure wireless networks and tablet access to the core are providing a modern, high-tech customer experience inside the branch. Much like other such businesses as grocery stores and movie rental kiosks, banks can now offer a self-service model that enables customers to perform a multitude of banking functions without employee involvement.
Conversely, the key to branch transformation, beyond integrated technology itself, is developing employees into “universal bankers” who can assist with a broad range of functions. Should customers have any questions during a self-service transaction, a staff member should be nearby and have the skills necessary to assist them—not simply direct the customer to another area of the bank. Therefore, branch transformation also calls for banks to transform their approach to staffing: banks must elevate the abilities of front-line staff by hiring more tech-savvy personnel and training employees to be more expert users of the bank’s technology themselves.
What this means for bankers: It’s time to start implementing more self-service offerings and building a team of universal bankers.
Omnichannel becomes reality!
Underlying the proliferation of branch transformation will be the further adoption of omnichannel strategies. Capital investments in service-oriented architecture have enabled delivery channels to be integrated, creating consistent experiences across each channel. Customers can begin the account-opening process online and then easily complete the process inside the branch. Banks can have a holistic view of the customer, including internet and mobile usage. And the list goes on and on, but the main point is that the technology has caught up with the concept–and the customer wins!
What’s more, with integrated tools like CRM for banking and customer analytics, banks can use analytics to develop more targeted campaigns to mobile users. These tools allow you to better know your customers and push offers to them that align with their needs. For instance, these tools can tell you which of your customers are prime candidates for a home equity loan, and then you can target those customers with offers via mobile banking.
What this means for bankers: It’s time to adopt more integrated technology platforms that allow you synchronize both information and the customer experience across channels.
Mobile payments become more popular.
If 2015 was the year of the mobile wallet (Apple, Android and Samsung all launched offerings), then 2016 is going to be the year mobile payments gain traction. With more promotion coming from providers and more acceptance coming from merchants, customers are going to start using mobile payment options more frequently. The key for banks is education: Your customers trust your advice, so talk to them about mobile payments—and be sure they make your institution’s debit card “top of wallet.” This allows you to capitalize on a more secure payment option as well as collect the interchange fee.
What this means for bankers: It’s time to educate your customers on the value of mobile wallets and ensure they have your bank’s debit card top of wallet.
For banks, Blockchain becomes an industry research project.
You may be saying “block what?” and that would be understandable. Blockchain is the distributed ledger that makes Bitcoin possible, and blockchain technology is a concept that’s starting to take root in the fintech industry. Visa, Chase, BBVA and NASDAQ have invested in such startups as Chain and R3 CEV, which adds significant interest to technology.
While there’s no immediate actions related to blockchain, bankers will start to hear more in the news and at conferences—and would be wise to begin educating themselves on the topic. Distributed ledgers are already beginning to affect change within the financial services industry, giving bankers and fintech providers pause to understand the capabilities of the technology and its application.
What this means for bankers: Not too much at this point, other than familiarize yourself with the concept and start learning as much as you can—blockchain has future implications for your business.
So, does next year’s strategy include any of these initiatives? Regardless of your approach, 2016 will be the year of implementation for many fintech solutions, so don’t be left behind.
And if you’re deciding where to start—or curious how other factors like compliance and risk management will affect the industry—check back in January. We recently completed our annual banking priorities survey, and we’ll share the strategic initiatives that more than 100 of your peers identified for the year ahead—and beyond.
Steve DuPerrieu is vice president of channels and analytics for CSI. In his role, he provides leadership for CSI’s delivery channel strategy, which includes digital banking, payment services, business and analytics software, and branch/retail delivery solutions. Steve is also a board member for the Association for Financial Technology (AFT).