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What will specialist banking look like in 2020?

Jordan Williams | 17:00 Wednesday 24th January 2018

Customers are expected to reject the traditional methods of banking by the end of the decade, according to one challenger bank.

In recent times, the banking sector has gone through some significant changes – from the launch of the Innovative Finance Isa, which offers new methods of investment, to Open Banking, which will change the way banks handle data.

But what does the specialist banking industry expect the landscape to look like in 2020?

Jon Hall, managing director of Masthaven, predicted that by 2020, the sector would see a wider variety of customers who do not fit the “box-ticking rules' from high street banks.

“…This, therefore, will require more individual application assessments and more underwriters,' Jon stated.

Open Banking

“The biggest change [by 2020] will be the onset of Open Banking: even as the big banks sure up compliance, we will start to see increased competition and innovation in the specialist space,' explained a spokesperson from Tandem.

Lewis Tuff, lead platform engineer at Revolut, said that with the arrival of Open Banking, customers were finally being put back in control of their data.

“They will be able to unlock new insights, effectively compare their current (and future) financial products and take advantage of new innovations facilitated through this open data model.'


Lewis also said that, in the near future, a key trend would be an open marketplace model that would be mandatory as consumers would find switching too costly for yet another current account.

“Cryptocurrencies will also be much more prominent with wider market penetration, acceptance and innovations superseding the current payments channels.'



TSB reported late last year that it had revised the planned roll-out of its new digital banking platform from its initial early November date to Q1 2018.

This announcement coincided with the introduction of TSB's facial recognition technology for iPhone X owners.

Carlos Abarca, chief information officer at TSB, said: “While it's always a perilous task trying to predict the future, what we know for certain is that customers will no longer accept the traditional way we used to bank.

“A customer today has more technology in their hand than the computers on their desk – their expectations around ease, convenience, speed, personalisation and security has changed for ever.

“If it takes more than five seconds for customers to open an app, it's too long.

“If it takes more than a couple of minutes to deposit money into your account, it's too long.

“With the rapid development of artificial intelligence, machine learning, big-data analytics and the internet of things, the banks will become more proactive in offering services.'

Artificial intelligence

Dorian Selz, CEO at Squirro – an artificial intelligence (AI) firm which works with banks such as ING and Investec – believed that AI had not really hit the mainstream yet, especially within specialist banking and corporate financial services.

“Despite all the hype, no AI technology has yet passed the Turing test: a test of a machine's ability to exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human.

“But the advances of faster computing multiplied by advances in algorithmic computing have been astonishing and the next great leap forward in adoption is surely imminent.

“For the specialist banking industry, that means using AI to get to grips with the unstructured data they hold.

“This is the really insightful data – social media, call notes, earnings call transcripts and much more – but CRM systems cannot manage this.

“It can have a true impact on the bottom line, and in a relationship-driven industry, such as specialist banking, really helps cement customer relationships.

“By 2020, AI will be fundamental to many specialist banking service providers.'



Jonny Davis, vice-president of global client management partnerships at Fraedom, told Specialist Banking that one of the biggest changes in the banking sector likely to have occured by 2020, if not before, was the rise in partnerships formed between banks and fintech providers.

Jonny explained that these partnerships were already increasingly apparent within both retail and commercial environments.

“If an established bank doesn't move quickly enough in an era of digital change, it leaves gaps in the market for new brands to emerge with a new approach to financial services..

“We saw this happen in retail banking in the 1990s with the emergence of First Direct, Virgin Money and Tesco Bank in the UK.

“In a few years, partnerships accelerating the development and introduction of services will become the norm for a majority of banks, both retail and commercial.

“They enable banks to sidestep the agility issues often associated [with] legacy systems, while also reducing their internal development costs.'

Lewis at Revolut added: “I think we will see an increasing number of key partnerships, mergers and acquisitions between challengers and incumbents.'

He predicted that there would be a wider range of technology-first companies moving deeper into finance – such as Apple, Facebook and Google – and a “land grab' for the most promising technology platforms and start-ups.

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