How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

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Between January and March 2019, 405 global retail banking executives were surveyed by The Economist Intelligence Unit on behalf of Temenos. They were asked about the changes taking place in their industry to 2020 and 2025. We’ve compiled their answers, detailing organizational responses and how their long-term strategy will be impacted.

Key Points From This Year’s Survey:

New technologies are more important than customer demands and regulation for the first time in its 6-year retail banking survey history
Retail banks’ top new proposition for innovation is building their own greenfield digital bank
Three in five respondents expect banks deploying more computing power in the public cloud by 2025 than they currently deploy in all the private cloud data centers
Banks are realizing the opportunities of open banking and are now pursuing more proactive strategies such as becoming aggregators of their own as well as financial and non-financial products and in some cases seeking to build digital ecosystems.
Banks are still looking to work with FinTechs with 56% of respondents saying that FinTech bank collaboration in sandboxes will become mainstream by 2025

Download the white paper today to find out more:

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

To remain competitive, banks globally have responded, some taking leadership positions, whilst others are being dragged into digital sales very slowly.

This 2019 version of our annual report tells a story of maturity in one segment and an overall market still open with gaps and opportunities to differentiate from the pack.

In this study you will access:

State of digital sales in banking
Digital sales-readiness matrix

The findings in this report are based on an assessment of the digital readiness of 70 banks in North America, Europe, and Australia. The findings were then compiled into this report, the 4th annual survey of its kind.

Download the white paper today to find out more:

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

2018 Forbes Insights/Temenos global survey ‘AI and the Modern Wealth Manager’ – LATAM results

As digital wealth technology including artificial intelligence (AI) increasingly finds its way into the hitherto traditional world of wealth management, a new balancing act has emerged that will define the future of the industry: an advisory service that blends man and machine to give a better service and improved results for increasingly tech-savvy high-net-worth individuals (HNWI) and newly affluent clients.

To better understand how digital wealth technology is playing out on the ground and where the technology is leading, Temenos and Forbes Insights surveyed 310 wealth managers (WMs) and high-net-worth individual investors across the globe about their acceptance and use of digital wealth technology including AI in wealth management. Of the total number of respondents, 27 per cent came from Latin America.

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How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

download report

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

The survey reveals the trends that will have the biggest impact for retail banks:

56

%

changing customer behavior and demands

39

%

changes in macroeconomic cycle

34

%

new technologies

download report

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

Africa and the Middle East share many common features: young populations, high smartphone penetration rates, and problems with unequal access to banks and banking services, particularly in rural areas.

These demographically young and fast-growing regions include hundreds of millions of consumers who are growing up with a deep attachment to their phones and the benefits that the internet has to offer. Historically, banks across the Middle East and Africa may have been slow to react to the demographic and technological changes around them, but this is no longer the case. Over two-thirds of African and Middle Eastern bankers (68% v 58% globally) now say adapting to new demands will have the biggest impact on their businesses.

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

To better understand how AI is playing out on the ground and where the technology is leading, Temenos and Forbes Insights surveyed 310 wealth managers and high-net-worth individual investors across the globe about their acceptance and use of AI in wealth management. Of the total number of respondents, 25 per cent came from the APAC region.

The clear message from the study shows that with the growing deployment of AI solutions for wealthy clients a new type of wealth manager is emerging, with APAC leading the way.

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How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

The Asia-Pacific retail banking market is diverse, reflecting the different levels of social, economic and financial institutional development. It ranges from the near universal coverage found in the more developed markets of Australia, New Zealand, Singapore and Hong Kong to the emerging market of Cambodia, where only 21% of people over the age of 15 have a bank account. It also includes India, where government policies have pushed inclusion by shifting state transfers, pensions and benefits directly into accounts or onto biometric smartcards. Accordingly, Indian account ownership has jumped from 35% in 2011 to 80% today.

However, bankers in The Economist Intelligence Unit’s survey see common themes. Within the Asia-Pacific region, changing customer demand will have the biggest impact on retail banking in the next three years. Regulatory trends are less of a concern in Asia-Pacific (40%), compared to Europe (46%) and North America (56%). Bankers in Hong Kong and Singapore seem to benefit from the more tech-friendly “try it and see” approach of their own regulators. Both the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) have opted to create “regulatory sandboxes” to encourage innovation. These sandboxes allow banks and FinTechs to trial their ideas while involving only a limited number of participating customers. However, the situation is very different in Australia, where bankers have come under fire from the regulator due to poor risk management, high fees and widespread mis-selling.

An April 2018 report by the Australian Prudential Regulation Authority into the Commonwealth Bank of Australia (CBA) made clear that “a widespread sense of complacency has run through CBA, from the top down”.2 The subsequent loss of 20m customer account details only compounded the likelihood of significant reputational damage.

Although Australia has not been Asia-Pacific’s leading example of customer-centric, innovative, fast and frictionless banking to date, this may change with new competition from smaller players. New competition should accelerate the digitalization process that could help restore the reputation of Australia’s bigger banks. The environment will also change with the federal government’s required phased implementation of open banking commencing in July 2019 by the big four: the CBA; the National Australia Bank; the Australia and New Zealand Banking Group; and Westpac.

download report

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

Regional change is driven by changing customer behaviour and demands according to 55% of banking survey respondents
Latin American banks see a bigger impact coming from new entrants than their peers in the rest of the world (48% vs. 36% globally)
For established banks, new payment players are the biggest threat according to 51% of respondents, followed by neo-banks (23%)
Survey respondents think that in-house innovation centres (51%), accelerator/ incubator programs (48%) , and creating closed bank hubs (48%) are the best way to innovate

The report, written by the Economist Intelligence Unit (EIU) on behalf of Temenos, explores the theme: “Whose customer are you? The reality of digital banking in Latin America”. This regional report explores the developing situation for retail banks in Latin America and derives from the recently launched global which surveyed 400 banking executives globally and was conducted by the EIU and Temenos. The regional report emphasizes the need for Latin American banks to further develop their digital banking efforts in order to improve their products and services, restructure their cost base and attract new customers who may have never banked before. Legislation is also encouraging bank and fintech collaboration to deliver digital banking to the unbanked.

download report

How Technology Is Driving the Evolution of Intelligent Banking

Digital disruptors, new technologies, new regulations and increasing customer demands mean banks have had to adjust their business models to deal with these new market challenges.

download report

Latest Temenos Multifonds Every Fund Survey key findings:

78% of the asset management industry believe ETFs will sustain current growth rates
62% predict increasing convergence between ETFs and mutual funds
Operational systems seen as the top challenge and risk
1 in 4 feel asset servicers are not keeping pace with ETF growth and complexity

With ETFs breaking through the US$5 trillion mark at the beginning of this year, the increasing complexity of products is ratcheting up the technical and operational pressures on asset servicers, such as fund administrators, according to the findings of the latest Temenos Multifonds Every Fund Survey.

In a global survey of over 150 asset managers, custodians, third-party administrators and professional service providers, Temenos Multifonds has identified that the asset management industry remains very bullish on ETF growth. 78% of respondents thinking ETFs will sustain their current stellar growth rates. Strong growth is predicted across all geographic regions, with 30% expecting the biggest growth rates in Europe, 29% in Asia and 20% in North America. Coupled with this rapid growth, convergence between ETF and mutual funds is expected to accelerate, with 62% of respondents predicting increasing convergence over the next 2 years.

However, this growth brings both challenges and risks. The biggest challenge highlighted in offering ETFs is operational technology and systems, followed by regulatory compliance, and external connections to exchanges and participants. The biggest ETF risks most concerning the industry were liquidity risks and operational errors, cited by 34% and 20% of respondents respectively.

As a result, not all service providers are currently keeping pace with the increasing ETF growth and complexity, according to 1 in 4 respondents. However, the good news is that those asset servicers who can fully support ETFs will have a competitive advantage moving ahead, with 83% of survey respondents highlighting this fact.

Regarding the findings of the Every Fund Survey, Oded Weiss, Managing Director of Temenos Multifonds, comments:

“While fragmented legacy systems and bolt-on surround technologies may have coped in the past, the asset management industry is increasingly realising that this approach is not fit for purpose moving ahead. Servicing ETFs quickly, efficiently and accurately raises particular challenges, and we are seeing an increasing number of clients looking to include ETF servicing in their core investment accounting system, all wrapped up in a single, global platform to handle both future growth and potential future regulation. With global ETF assets predicted to reach $7.6 trillion by the end of 2020, there’s a massive opportunity out there for those asset servicers who get it right.”

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