Last week, we returned from the Global CIO Banking Summit in beautiful Dorking, England. After spending three days with about 100 delegates from some of the world’s largest financial institutions, it’s clear that the industry is seeing enormous change. Here are some key thoughts from our time at the event.
The Amazon Effect
While most often seen in the context of retail, the Amazon Effect is simply the consumer movement away from brick and mortar stores in favor on online shopping. And it appears that banks are starting to feel the shift. Traditional banks are under tremendous pressure from online banks and FinTech companies – referred to as Challenger Banks – to provide more online services and integrations. Millennials want a frictionless banking experience (read: they don’t want to deal with bankers) and they want to be able to do more from their mobile phones. This is forcing CIO’s to leverage customer data to create service streams for customers. Not surprisingly, legacy and core systems continue to challenge the ability for CIO’s to access this information easily.
Cloud, AI, and the Future
Cloud was a dominating discussion topic over the course of the event. While the consensus from the crowd seemed to agree that cloud is finally ready for prime time, there also seemed to be concern around the overall cultural change needed to support cloud initiatives. Other technologies also seemed to highlight the desire for automation and AI for customer service, but with less enthusiasm around the readiness of these emerging technologies. Still, the conversation seemed to continuously circle back to the need for organizational support for transformational changes.
Since the conference included banks of all sizes and geolocations, it was interesting to see how success was impacted when change was driven C-Suite and institutionalized beyond IT. I believe this will be an interesting one to watch. Obviously, consumer banking isn’t a huge money maker for larger financial institutions, but forfeiting the ability to see the transactional level of detail could mean missing the opportunity to present offerings aligned with life stages, such as buying a new home or having a child.
Open Banking Fears & Promises
The Belle of the Ball was definitely the discussion around Open Banking and PSD2. For those that might not be familiar, Open Banking refers to a concept of allowing third party developers to build applications and services around a financial institution. For the EU, or those doing business in the EU, this is a compliance issue with a September 2019 deadline fast approaching. In an effort to open up bank monopolies and provide options to consumers, banks are now required to offer APIs for third party integration. This age of openness certainly allows customers to benefit from better loan rates and an improved user experience, but it also increases the attack surface which could mean the exposure of valuable data. Worse yet, responsibility for such a breach still lies with the financial institution.
Clearly, security was a hot topic for an industry that has enjoyed decades of success with monolithic enterprise applications that aren’t exactly…easy to open up. Still, everyone seems to agree that open banking could force a much needed revolution for Lombard Street occupants and the CIOs that were at the Global CIO Banking Summit were clearly up for the challenge.
Overall, it was refreshing to see leaders in a historically closed industry readily collaborating with vendors to tackle the issues and opportunities surrounding these emerging trends. I expect that this financial revolution will be both refreshing and educating as the US markets watch with anticipation for the outcomes.
Here’s a copy of the Waratek workshop presentation for those interested.