12th December 2017

Fidor Bank offers six predictions for 2018
Opinion

With the end of 2017 in sight, Sophie Guibaud, VP of European Expansion at challenger bank, Fidor Bank, makes six predictions on what 2018 holds in store:

“1. Payment Services Directive (PSD2) finally goes live: It has been a long road to PSD2. However, it will finally be coming into force in January 2018 and that means that banks must open up their customer data to third parties on request. For everyday consumers, much will change next year due to this. We’ll see a huge increase in banks seeking to become a ‘one-stop shop’ for their customers.

“In reality this means that banks will provide wide access to a range of services, from the ability to pay from bank accounts at a touch of a finger to accessing integrated comparison tools to find the best banking deals. Thanks to PSD2, banking as a whole will become much more personalised. The simple fact is that data is now as valuable as gold to financial organisations, and they need to treat it as such.

“2. RegTech takes off: 2018 is the year when RegTech really takes off, thanks to two key pieces of legislation coming into force, MiFID II and GDPR. Due to the need to be fully compliant with these new rules, financial organisations will be looking at immediate options to help them decrease their regulatory risk and costs, while also improving the customer experience next year.

“The new regulations will, in future, have a huge effect as financial organisations’ relationships with regulators will rely upon real time data to be shared to improve and speed up risk management and market stability, all through the power of APIs.

“3. ‘Real AI’ really progresses in 2018: 2017 has been the breakout year for artificial intelligence (AI), as the technology moved from the backroom of financial organisations to actually pointing to how banks will operate in the future. Next year will see this progress further as the first real AI-based consumer products and solutions come to the fore.

“Meanwhile, in the background, such technology will be heavily used to collect and organise data, and will ultimately lead to more personalised banking for consumers, not only improving the customer experience but ensuring that the bank remains relevant by offering consumers the right offers at the right time and supporting them with proactive notifications whenever they encounter a situation that require the support of the bank.

“4. SME banking comes to the fore: While this year the UK Government struck a deal with Britain’s biggest high-street banks to extend millions of pounds of lending to SMEs, loan applications actually fell. However, due to the challenging environment that European SMEs will find themselves in next year, we’ll likely see more players enter this market, which already picked up since last year, especially from new innovative Fintech companies.

“These challengers will be focused on simplifying on-boarding process, facilitating access to banking services and cutting down the red tape faced by SMEs in applying for a business loan. With more players on the market, it will also become the time to find the right business models for those players, those being potentially different across geographies

“5. Cashless society continues: Despite the UK introducing new one pound coins and £10 notes this year, we’ll see a further acceleration to a cashless society, not only in Britain but globally in 2018. This profound shift in how people pay for goods and services will also have an effect on the rise in blockchain adoption. As all money can more easily be traced to its rightful owner and beyond government’s control, Bitcoin will continue to rise in popularity and also valuation.

“6. Banking as a service (BaaS) goes international: BaaS will take off globally next year, as to date it has been primarily driven in Europe. This means we’ll see an increasing number of companies competing to provide ‘white label’ banking products to organisations struggling to keep up with the digital revolution. Despite a proliferation of competitors globally in this area next year, established players will appeal more broadly due to a track record of getting it right.

“In tandem, banking marketplaces, which offer consumers a host of different financial products will be a natural by-product of this. They offer banks a huge opportunity to remain relevant and remain the main contact for consumers in terms of their financial needs as marketplaces will have all the financial products that a consumer could want, all in one place.”