The impact of new players, digital technologies, changing regulations and the power of advanced analytics will define future winners and losers in the banking industry next year and beyond, according to more than 100 industry leaders who shared their thoughts for the 2017 Retail Banking Trends and Predictions report. These trends and predictions were also validated and ranked by responders to a global industry survey, with strategic priorities identified.

The sixth edition of this proprietary research included insights from bankers, credit union executives, industry analysts, advisors, authors and solution providers from Asia, Africa, North, South and Central America, Europe, the Middle East and Australia, making this report the most comprehensive in the industry.

The report found that data, advanced analytics, personalization and improving the customer experience are at the forefront of many of the predictions. In fact, the impact of improved use of customer insight is the foundation for most of the trends in 2017.

Expansion beyond traditional products, services and channels is also predicted, as open APIs (application program interfaces), the Internet of Things (IoT) and more FinTech/banking partnerships are expected. The industry will attempt to achieve these goals under an umbrella of cost cutting pressures, changing regulations and an increasing interest rate environment.

“2017 will be the year of ‘convergence’ in financial services,” says Sebastien Meunier, senior manager at Chappuis Halder & Co. “There will be more cooperation between financial services and FinTech startups, blurring lines between traditional products, and the acceleration of the convergence of technologies including mobile, distributed ledgers, IoT and cognitive computing.”

Brett King, best-selling author and CEO/founder of Moven adds, “2017 will be the year of the digital-direct effort by banks. In typical form, 7-8 years after Simple and Moven were founded, banks will finally figure out that customers aren’t visiting branches to open accounts anymore and that digital acquisition is imperative.”

Below are the top 10 predictions and selected insights from this year’s trends and predictions report:

Removing Friction from the Customer Journey. An optimal customer journey makes every step and touchpoint in the buying cycle streamlined, efficient, consistent and personalized from the consumer perspective. Financial institutions need to reimagine their core journeys from front to back by addressing key customer pain points, identifying new opportunities to delight customers in differentiated ways.

Brian Solis, principal analyst for the Altimeter Group and bestselling author says, “More than ever, the mobile apps that become the ‘Uber of banking’ are becoming the minimum ante to compete in a connected economy. 2017 is a year that calls for transparency in banking, operations and customer engagement. It’s time for leaders to disrupt themselves before the gift of disruption is given to them by someone else.”

Increased Use of Big Data, AI and Advanced Analytics. Tapping into huge quantities of dormant, bank-owned data is essential to offering the individualized engagement that customers demand. Despite the vast amount of data available and the industry’s formidable resources, most banks and credit unions are still far from realizing big data’s full potential.

This gap in capabilities is caused by competing priorities, the complexity of knowing what data to use and how to collect the insight, as well as the lack of a coordinated vision. Going forward, the use of machine learning will provide opportunities for greater personalization and channel optimization.

“Over the next few years, banks must embark on Data Gentrification efforts – not just cleaning up the data they have, but collecting and using BETTER data,” says consultant Ron Shevlin from Cornerstone Advisors. Data that better predicts and explains consumers’ financial health, directions and trends in their financial health, and actions needed to better improve financial health.”

Regarding the application of artificial intelligence, Bradley Leimer from Santander U.S. says, “forget roboadvisors for investments only … our entire financial life will start to have a robo-component. And we will be better off for it.”

Improving Integrated Multichannel Delivery. As introduced in last year’s trends report, the use of advanced analytics provides an opportunity for an optichannel experience, where the optimal channel is based on the customer’s need and preferred channel. For any organization, the priorities should be to make basic transactions (balance inquiry, funds transfer and bill payments) more simple and intuitive, while also making the next stages of engagement (account opening and check deposit) more easy to complete with an online and mobile device.

According to Danny Tang, channel transformation leader at IBM, “Leading banks will start converging mobile and online banking into new digital banking applications composed of widgets built on an agile microservices architecture. The new digital banking applications will offer many cross-channel services, such as text with contact center, video with relationship banker, cardless withdrawal at ATMs, appointment making, and transaction pre-staging prior to a branch visit.”

Use of Open APIs. APIs were not even listed as a 2016 trend, but is number 4 in 2017. The use of open APIs provides banks the ability to flexibly distribute products through third-party channels provided by FinTech partners, facilitating innovation and reducing time to market. Banks could also use open APIs to incorporate third-party offerings into their own product suites, offering a broader range of services, which would likely boost customer loyalty.

“2017 will be the year of open marketplaces and platforms,” states Chris Skinner, author and CEO of The Finanser Ltd. “Platforms support the rapid cycle deployment of microservices into a financial marketplace. Those include apps, APIs and analytics that transform the back, middle and front office respectively. As the financial world is rapidly moving to open, loosely coupled marketplaces, any bank with old legacy technology will start to look like a dinosaur.”

Partnerships Between Banking and FinTech. Continuing a trend that emerged in 2016, legacy organizations will leverage the advantages of scale, stability, trust, experience in navigating regulations and the access to significant capital to partner with FinTech firms that offer the agility, innovation culture and technological expertise that legacy organizations seek. The resultant partnerships will benefit the end consumer.

“In 2017, there will be a widening of the gulf between banks that are building meaningful partnerships with FinTech firms and those that think that they are because they have a couple of tech vendors and a procurement department,” according to JP Nicols, managing director of Fintech Forge and chairman of Next Money U.S.

Expansion of Digital Payments. Despite an increase in awareness of mobile payments, usage continues to remain flat, illustrating the challenges in changing consumer behavior when merchants and issuers can’t deliver a strong value proposition. To stimulate mobile payment use, financial institutions will need to test discounts and rewards while improving the consumer experience.

Matthew Wilcox, senior vice president of marketing strategy and innovation at Fiserv predicts, “Faster payments will start to become the standard in the U.S. Faster payments will start with simpler payment types, but will evolve during 2017. Acceleration of payment speed can help financial institutions regain control of their customer’s payment relationship and help drive towards their goal of increasing digital engagement.”

Responding to Regulatory Challenges. The financial services regulatory environment continues to be stringent, very complex, highly uncertain – often with conflicting regulations. In addition to causing a huge increase in the costs of compliance, they have also impacted many organizations’ business models. In 2017, it is expected that non-bank competition will begin to be both authorized and regulated, creating both risks and opportunities.

“2017 will be the year of ‘RegTech’”, states Matteo Rizzi, co-founder of the FinTechStage. “Regulators are beginning to create environments where innovators and incumbents can find common ground before scaling their product or solution. Cross-pollination, and a more coordinated approach among regulators across geographies, will help FinTech startups while facilitating a better collaboration with legacy financial institutions.”

David Brear, CEO and founder of 11:FS in London adds, “PSD2 will put massive pressure on the U.K. incumbents, global regulators will embrace FinTech competition and regulatory concessions, Africa will embrace APIs and financial inclusion will become a mainstream and actionable topic. At the same time, the U.S. will embrace change in the regulatory and political system.”

Exploring Advanced Technologies. While opportunities around blockchain technology did not make the top 10 list of trends in 2017, it was ranked significantly higher by larger organizations. Of more general appeal were technologies around artificial intelligence (AI), the Internet of Things (IoT) and roboadvising. While not ranked as high as other trends, this is an area which is increasing in importance daily as evidenced by the massive sale of digital devices like Amazon’s Echo during the past holiday season.

“The most significant change in 2017 will be voice-mediated AI,” predicts Brian Roemmele, founder of Payfinders.com. “AI and machine learning, with a voice interface, will become a powerful way for banks to become more relevant with their customers, proactively recommending new products, on-demand finance and credit.”

“There will be increasing demand for providing intelligent virtual assistants to engage with customers through voice and text commands,” states Steve Luong, senior director of marketing for the sponsor of this year’s study, Kony, Inc. “Both help banks and credit unions offer highly personalized services to their consumers, improve customer satisfaction, and much more.”

Emergence of New Challenger Banks. The term “challenger bank” is widely used to describe a banking organization, started from the ground up and built without relying on another banking firm for back office support. While very common in the U.K., this breed of bank will begin to emerge in the U.S. in 2016 as new regulations are beginning to reflect this form of financial organization.

“The integration of advanced analytics, digital delivery and devices will herald in new challengers that will be watched closely by start-up banks and legacy organizations,” predicts Spiros Margaris, founder of Margaris Advisory.

Investments in Innovation. Investing in innovation dropped in prioritization in 2017, possibly reflecting the significant increases in investment over the past several years. In other words, the importance may be the same, but most firms are geared up adequately (in their view). One trend we are seeing is a shift in emphasis from “innovation labs” to real-time testing both in consumer venues and in partnership with FinTech start-ups.

We will also see more done in the cloud in 2017. “The biggest news will be material or mission-critical financial services technologies moving to cloud-first architectures, opening the door for innovation at the core of a bank,” states Scott Bales, managing director of Innovation Labs Asia.

Finally, there were concerns about the difficulty in finding the right teams to build for the future and the impact of competitors from China and elsewhere. “2017 will see an increase in competition for talent with the rise of the Asian hub,” offers Claire Calmejane, director of innovation at Lloyds Banking Group.

Sam Maule, director and senior practice lead at NTT Data agrees, “The emergence of Asia, led by China, as the leader in FinTech investment and innovation of financial services products will occur due partially to the uncertainty in Europe thanks to Brexit and the new administration in the U.S.”

Mr. Marous is the co-publisher of The Financial Brand as well as owner and publisher of the Digital Banking Report, 2017 Retail Banking Trends and Predictions. He can be reached at jmarous@thefinancialbrand.com and followed on Twitter and LinkedIn.