technology
trends
The road to the
bank of the future
Preparing for the next wave of reinvention is largely
being driven by a rapidly changing technology landscape.
Banks seeking to understand how they should transform
and invest in programmes of work to activate new
capabilities, need to consider technology
innovation and trends.
1. Source: EY Global Banking Outlook: Transforming Banking for the Next Generation, 2015
Advanced
Cyber security robotics
Agile
Big Robo advice
Data Cognitive
Machine learning computing Quantum
Cloud computing
FinTech Internet
computing
of things
On-demand
Virtual
services
reality
Social
Technology
Augmented
reality
Beacons
Today
Technology adoption Digital investment Time
Thinking out to the horizon will enable banks to start To avoid paying a premium for scarce resources,
developing new workforce management strategies banks will have to both invest in reskilling their
and regulatory and compliance frameworks, that own staff and work with education and academic
will be required to leverage future technologies. providers to ensure the workforce of the future
have the necessary skills.
New and emerging technologies will change the
profile of workforce skills and capabilities, creating Future technology is also likely to require a high-
demand for currently scarce IT and technological degree of compliance management. Many new
skillsets. The worldwide competition for qualified technologies will require additional government
talent in science, technology, engineering and regulation, others, such as the internet of things
mathematics is as its highest level since the global and quantum computing, will require
financial crisis. According to Qualigence, by 2015, government support.
60% of new jobs will require skills that only 20% of
2
the population possess.
Clear policy and guidelines will The amount and types of Mounting digitisation and
help financial institutions avoid readily available customer data connectivity means cybercrime
breaching regulations, when using are expanding rapidly. Banks are is on the rise. With employees
cloud services. APRA already has using big data to develop insights often plugged into insecure Wi-Fi
a standard for industry, regarding to fine-tune systems, inform networks and using their own
the use of cloud. As regulatory credit and risk decisions and devices, business data is
and data-protection requirements develop new products and increasingly vulnerable. As
change, banks will have increasing services. cyber-attacks become more
opportunities to scale back costs, sophisticated, data breaches are
by managing back-office functions However, making sense of growing in size and frequency;
through a cloud computing the volume and variety of this the economic toll is rising. The
service arrangement. information is a challenge. Center for Strategic and
Advanced analytics software International Studies (CSIS)
What we are seeing can identify patterns hidden in estimates that digital crime and
in the market: massive data flows, automating intellectual property (IP) theft
• A prominent US fintech’s a wider range of knowledge tasks. currently cost between US$375b
interactive cloud platform In addition, banking data can and US$575b per year — eclipsing
solutions are powering create new revenue streams by the annual GDP of most nations.
Australian wealth management selling sanitised information on
and integrated small lending spending patterns or activities Although a portion of cyber-
fintech firms to third parties. threats come from “hacktivistis”,
the most concerning threat for
• The Australian online division
What we are seeing financial institutions is from
of a global bank, has built
in the market: organised cybercrime. In future,
a virtualised “bank in a box”
• A Big 4 Australian bank emerging technologies such as
on a private cloud solution,
uses information gleaned blockchain and quantum
streamlining back end
from customer transactions computing will pose security
operations and creating
to determine the right product, threats. Banks must consider their
new operational flexibility
pricing and financial advice options and opportunities now.
for the customer
What we are seeing
• Another Big 4 Australian bank
in the market:
has advisors feed analytical
• A global security company
questions phrased in plain
has recently investigated
English into a cognitive
with Interpol, the theft of over
computing software, which uses
a billion dollars from global
customer data to create suitable
financial institutions including
product recommendations
those in Australia
for individual clients
• In July 2015, large Australian
At the same time, banks are banks and the Australian
facing increased demand to government held a summit
provide their own information, to discuss cybersecurity, with
with regulators requiring intelligence sharing, skills and
increasingly frequent submissions workforce development high
of very granular data. on the agenda
Underpinned by cloud and The ability to merge the digital IoT and AR combine to provide
analytics, IoT will give banks an and physical realities will transform context-aware computing. This
unprecedented level of insight into customer experiences, integrating technology uses situational and
their customers’ real time needs, banking seamlessly into everyday environmental information about
enabling them to tailor advice, interactions. Banks must examine people, places and things to
products and services at an their processes for points where anticipate immediate needs
individual level. immersive experiences, interactive and proactively offer enriched,
touch points or custom apps can situation-aware and usable
Beacons are one of the first both improve the customer content, functions and
opportunities for banks to use experience and create new experiences.
IoT to drive business outcomes sales opportunities.
What we are seeing
What we are seeing What we are seeing in the market:
in the market: in the market: • An Australian bank uses context-
• An Australian bank uses BLE • A property investment iPhone aware computing in its banking
beacons in branches to app from an Australian Big 4 app, which notifies the bank if a
interact with customers bank, is using augmented reality customer is at an airport, so that
insights to help consumers make overseas transactions won’t be
smarter property decisions incorrectly deemed fraudulent
Disrupting internally
To keep customers and sustain profitability, banks must evolve in line with their
strengths through internal transformation. This will involve investing in disruptive
technologies and creating a culture of innovation.
Tackling enterprise efficiency through Improving customer propositions
technological transformation for greater revenue
Banks must transform their IT infrastructure by Customers are interacting with brands through
changing how they use technology to improve process mobile devices more than via PCs. They are also using
efficiency and effectiveness. Aging infrastructure mobile more frequently to make purchases. As these
requires manual interventions for data aggregation mobile capabilities become more prevalent, customer
and analytics, preventing the uptake of near and expectations will rise in line with them. Increased
distant technologies. Therefore creating the right mobility and the influence of social media, means
foundations is essential; banks need to think about technology users are expecting and demanding cloud
the problems they face today, while also picturing how and mobile technologies as staples in their daily lives.
they want to operate tomorrow.
According to the EY Economist Intelligence Unit,
Banks should also look beyond merely complying as early as 2013 almost 80% of companies said their
with regulations and begin to use these requirements customers were changing how they access goods
to their advantage, to support changing internal and services. But only half of these companies were
processes. Also most post-financial crisis regulation responding by adapting their pricing and delivery
becomes business-as-usual, banks may finally be able models. Banks need to be ahead of the curve and
to think strategically about how technology and data be at the forefront of the latest styles of customer
can transform their internal processes. interactions.
Changing culture by providing resources In developing the right workforce to support the
to increase collaboration and innovation digital world, banks must arm staff with collaborative
To create an institution that embraces new tools, implement applications based on user
technologies successfully, banks need to develop requirements, deliberately encourage mobility
a culture that is comfortable with disruption and and encourage innovation via programs,
seeks positive change. The future is likely to require benchmarks and recognition.
a move to a more virtual workforce, where employees
connect to work anytime, from anywhere, and on any Bringing this to life for an organisation
device. Remaining office configurations are likely to Executives seeking to promote an innovation
be highly flexible, while still supporting teaming culture need to encourage employees to:
and collaboration. 1. Challenge — the organisation from the top
down to collaborate, innovate and think
These greater levels of autonomy and flexibility outside defending the core business
are likely to be complimented new means of engaging
2. Create — a technology strategy, shifting
with talent. Companies are already able to connect
from short- term thinking to long-term
to resources on demand, rather than owning them,
strategic decision making
through tapping into networks of workers and skilled
staff through crowdsourcing and freelance platforms. 3. Incubate — solutions through prototyping
and test and validate initiatives through
However many of these developments will create new small scale experimentation
challenges for leaders. Not only are different skill sets 4. Activate — the solution on a commercial scale
required to manage remote and contingent workers, to capture economic value for the business
but existing organisational cultures will be harder
to maintain.
About EY
EY is a global leader in assurance, tax, transaction and
EY’s IT Advisory Services works with advisory services. The insights and quality services we
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Sonia Miles-Khan
IT Advisory, Financial Services, Australia