1) Clouds on the horizon and lipstick on a pig

Banks have always over-hired and then overfired as the economy rolls through its cycles. Again, today we read of layoffs taking place in all corners of the world — but this time it will be different. The majority of the positions that are being cut will not come back.   
 
A potent combination of flattening yield curves and negative interest rates, trade wars, the election year in the US, Brexit and fear of economic slowdown, will propel integration and automation projects across the mid- and back-office to reduce costs and increase accuracy permanently. Companies of all sizes have come to the realisation that a good customer experience needs end-to-end digitalisation, otherwise it’s just “lipstick on a pig.” 
 
2) Be afraid, be very afraid

Banks will accelerate moving to the cloud and taking on value-add partnerships in response to the Asian titans Alibaba and Tencent. The world’s largest retailer Alibaba owns Ant Financial and Alipay, while gaming company Tencent owns WeChat. They are leading the world in financial services and payments products and have discovered the secret sauce for creating value out of data: cloud for scalability and AI for perishable insights.   
 
Separately, neither big tech nor banks have this capability. But together, they do — and the west is taking note. Witness the recent announcement of the Citi and Google partnership. And Facebook’s faceplant with virtual currency Libra, saw big tech get a painful lesson in jumping through banking regulatory hoops. 
 
3) Your bank account will have a brain

With the firehose speed of 5G data transmission, and the ever increasing sophistication and effectiveness of AI, banks will cease to interact with their retail or commercial clients in a reactive fashion. By analysing cash flows, behaviours and trends, banks will step forward as partners in financial management. They will proactively assess if, for example, your utility bill that will be automatically paid is appropriate given your historical consumption and the weather patterns, and either pay it or flag it accordingly. For commercial clients, banks will proactively offer up credit lines given an analysis of their working capital history versus current requirements.  
 
Banks will also have to sacrifice overdraft fees (forfeiting around $2bn in annual revenue globally) because it will promote stickiness, and because technology will never allow overdrafts to happen. 
 
4) Better to prevent an accident than pay for one 

Rather than shell out for risk events after the fact, insurers will double down as partners in risk prevention and control, particularly with business clients. Commercial customers are much more willing than retail clients to share data, knowing that it can help improve risk control and prevention. 
 
For instance, while an individual might be reluctant to use a wearable to share biometric information with a health insurer, companies will have less qualms insisting that their fishery, construction or steel workers wear wearables to prevent injuries in high-risk situations.