Powered by MOMENTUM MEDIA
investor daily logo

COVID-19 supercharges bank disruption

  •  
By Lachlan Maddock
  •  
3 minute read

The banking sector is set for sweeping change as new technologies – and regulations – change how banks do business.

Two-thirds of banking executives believe that technologies like artificial intelligence and machine learning will have a major impact on global banking in the next five years, according to a global survey conducted by the Economist Intelligence Unit on behalf of Temenos. 

Forty-five per cent of respondents say their strategic response to COVID-19 is to build a “true digital ecosystem” integrating self-built digital services and third-party offerings. Seventy-seven per cent said that unlocking the value of artificial intelligence would be the “key differentiator” between winning and losing banks, while improving user experience through better personalisation would be the most valuable use of artificial intelligence (28 per cent). 

“Banks were under huge pressure due to new competitors, ongoing regulation and slowing profit growth – these pressures have intensified as a result of the pandemic,” said Max Chuard, CEO of Temenos. “The report highlights that senior banking executives believe that new technologies such as AI will have the greatest impact ]on] banking in the coming years.

==
==

“As the [digitisation] of banking continues, these new technologies can help banks fend off competitors and gain competitive advantage.”

Regulation of digital technology is seen as the second-most impactful trend (42 per cent) in the industry behind technological change, with respondents seeing it as a “game changer” for the development of open banking in certain regions and the prospect of non-traditional competitors entering the banking sector. 

Despite that, the arrival of neobanks was a minor concern (20 per cent) due to their inability to dent savings or lending volumes to a significant extent. 

“Retail, corporate and private banks were already under pressure to deploy new technologies quickly and change their cultures in order to compete with big tech firms and payment players and deliver an engaging digital experience,” Mr Chuard said. “Now, as digital banking surges as a result of the coronavirus crisis, this task is more pressing than ever.”