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I am sure I will not be alone when I say that 2020 has been a surreal year. For our industry it has certainly been a tumultuous one. Yet through times of uncertainty the Mobey community has demonstrated resilience. We have not sat back and hoped to weather the storm; our members have proactively worked together to share real-time learnings and identify new approaches to help navigate the global pandemic, aid the recovery of our economies and support customers.
On the year of Mobey’s 20th anniversary, we have seen unparalleled innovation and collaboration within our association. Through working together, we have identified a number of key trends and opportunities for the digital financial services industry which are relevant to not only the next 12 months, but for the next 3-5 years ahead.
Initiatives to enable digital society
Since Mobey’s inception in 2000, demand for digital services has increased year-on-year and is increasingly critical to successful customer engagement. Yet the events of 2020 highlighted the many shortcomings of our existing digital infrastructure. It has reinforced the need for a robust ID system that can provide dependable access to vital services including financial support, government benefits, healthcare and education. The widespread introduction of regional lockdowns emphasised the need for citizens to be able to prove their identity via digital methods, and to be able to do so with a high level of assurance on its security and reliability. A prominent example of this requirement emerged in the UK when NHS workers were granted priority access to supermarkets by displaying their physical badges, which led to an increase in targeted muggings.
With the potential for regional lockdowns to continue into early next year, and the closure of more retail branches on the horizon, adoption of eID is only going to accelerate further. We are already seeing innovative and dynamic solutions being launched across the public and private sector, and more will follow. Banks can lead the development of a fairer, more trusted approach to digital identity and empower customers to securely access, and seamlessly manage, their finances from anywhere. This will be central to aiding the recovery of our economies in the year ahead.
Unlocking new value through APIs and data
In parallel, global momentum for open banking has made steady progress this year. While the introduction of PSD2 was the first push for financial services to join other industries in the move to API-driven approaches, banks are now looking beyond compliance and exploring how APIs can be monetised. Superior PSD2 interfaces that third parties will pay for, as well premium APIs that are not required to be opened under regulation, are just some of the developments seen so far. There are also many opportunities in the SME and corporate segments too.
With payment margins set to be squeezed even tighter in 2021, commercial APIs can be the key to unlocking new value for banks, but it will be important to communicate the benefits to customers through the development of personalised experiences. Long-standing Board Member, Jordi Guaus, touched upon this notion in his latest blog. As consumers, we want services and products that make us feel a certain way and today banks are focused on creating compelling consumer experiences (CX). In 2021, as more banks move to commercial API models, we can expect to see the development of better cross-border, instant and invisible services.
Finding the sweet spot between innovation and privacy
Unfortunately, there is still a perception that privacy is the adversary of innovation. While banks hold valuable data that can be used to create new personalised services, they often rely on third parties to bring them to market, which makes complying with data privacy regulations like GDPR more complex. Although there are various anonymisation techniques that can be used to ‘mask data’ and ensure compliance, some of these existing techniques are open to criticism from consumers, as well as regulators. It is therefore hugely beneficial that banks have a long history of managing sensitive information, and are uniquely well-placed to support the development of new services. They do however need to carefully consider the data privacy techniques they currently use, and familiarize themselves with new and emerging requirements. This is a key focus for Mobey’s AI and Data Privacy Expert Group currently. The group is looking at “classical” anonymisation techniques, as well analysing emerging approaches, to identify and help banks understand the use cases they are best placed to support.
Prepare to bank on sustainability
And finally, though it may seem novel in financial services, sustainability is fast becoming a mega trend. Within Mobey we are seeing fantastic initiatives from banks and fintechs, who are partnering to launch apps and services that incentivise customers to lower their environmental impact. We are also witnessing new players enter the market that base their entire business models and strategies on being green. If we consider the growing need to strengthen the customer relationship, sustainability is a way of creating deep and long-lasting connections based on values – as consumers we feel a sense of community and loyalty to companies that share our beliefs. With support for sustainability also growing at a national level, there is increasing interest from venture capital companies; maximising the appeal of green fintech start-ups and challenger banks and creating opportunities for them to secure the funding needed to grow.
While it has been a complex year, the pandemic has reminded us all of the importance of community. As we prepare to enter the new year, I am confident that we can continue to share valuable insights and work together to help the industry prepare for whatever 2021 has in store.
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