Software AG Makes Banking Predictions for 2017.

Software AG, a publicly traded company based in Germany, has published a list of predictions for the banking industry for 2017. Yes, we all know that banking is moving to our smartphones and the corner bank branch is going the way of the dinosaur. The sooner the better too.

Anneliese Schulz, Vice President at Software AG Asia (based in Singapore), believes that there will be some “seismic shifts” in store for the banking industry over the next few months. Of course Software AG is positioning itself to help old finance navigate the choppy waters of disruption and irrelevance.

So what does she predict?  You can see her expectations for 2017 below.

  • This year will finally see banks begin to wrap their arms around their most valuable asset: client data. While banks have spent millions of dollars to collect the data, few have dedicated themselves to fully operationalizing the insights to be gleaned from it by using predictive analytics and machine learning. In fact, a recent survey by Options Group revealed that to maximize the opportunities offered by emerging technologies, banks are expected to hire significant technology specialists, aimed at turning data into actionable insights. Inevitably, new revenues for banks will depend on how efficiently banks can operationalize real time data so that it can be monetized.
  • Banks will start investing in fintech and digital banks that are currently disrupting traditional banking. While traditional banking has the distribution and greater trust (at least among older generations), fintech and digital-only banks have newer, more agile technology.

    While its indisputable that fintech and traditional banks represent a formidable force, they have significant culture differences. There will be some awkward courtships, but marriages will happen.

  • Active asset management is losing market share to the index providers. Robo-advisors, offered by long-standing competitors as well as Fintechs, pose a further threat to traditional asset management. Given a rising interest rate environment, which few active portfolio managers have experienced, we will see more automation through these Robo-advisors, and consolidation in asset management as well.
  • We will see an acceleration of bank branches closing down as customers increasingly adopt mobile and online banking. Most banks will maintain smaller, anchor branches to provide a reassuring brick and mortar presence versus purely digital competition. As banks digitally transform and focus on costs, they will transition remaining branches to low volume/high value activities.
  • Regulation and market forces are combining to fundamentally transform the way that people bank. Competitive forces globally are seeing leading banks leapfrogging regulation to open up their systems and data, and begin to develop ecosystems of partners.  The result will be greater choice and competition for customers, and the possibility of entirely new revenue lines for retail banks.
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