As financial regulators encourage banks to comply with Open Banking initiatives, the Accenture Banking Technology Vision 2019 study suggests pursuing such a strategy may actually expose core banking systems to greater security vulnerabilities, particularly as banks open their systems to third-parties.
The consultant cautions financial institutions to strike the right balance between robust security and easy-to-use customer experiences. The study revealed that while 92% of surveyed banks believe that customer trust in banks’ ecosystem partners is very or extremely important, only 31% of bankers say they know their ecosystem partners are working diligently to be compliant and resilient with regard to security.
“Security is only as good as the weakest link in the network of ecosystem partners, and the global trend toward open banking is increasing the spiderweb of interconnectivity among banks and third parties — creating additional points of weakness and vulnerability in banks’ network security,” said Alan McIntyre, global head of Accenture’s Banking practice.
“Customers trust their banks and are willing to provide their personal data in exchange for relevant products and services. To maintain this trust, banks must rethink their approach to network security, focusing on the broader ecosystem, not just the bank. This will require a shift from a compliance-centered approach to an active cybersecurity stance,” he added.
The report’s “Get to Know Me” trend found that the primary use case for banks to adopt new technologies is to help recapture customer intimacy, replicating the experience associated with doing business with a small-town bank.
Most bankers surveyed believe that digital demographics will give them a new way to identify market opportunities and unmet customer needs (cited by 85%) and a more powerful way to understand customers (83%). Having a better understanding of customer behavior will also help banks protect their customers better, as banks that truly know and understand their customers are less likely to be fooled by fraudsters and imposters.
McIntyre said digital tools can provide banks with new, near-real-time information about their customers and help them identify unmet customer needs. He further noted that creating a rich view of customers’ digital and technology-driven activities is a powerful tool that banks can use to get closer to tailoring their products and services to the elusive ‘segment of one.’
As customer demand and technological innovation push banks to interact with their customers on their terms, customization and real-time delivery will raise the competitive stakes.
According to the “My Markets” trend, banks will need to offer the most relevant products and services to their customers at the exact right moment in time, and many believe that access to 5G networks will help them deliver on this promise.
Seventy-eight percent said that 5G will revolutionize the banking industry by offering new ways to provide products and services, such as faster video transmission to support seamless delivery of financial advice.
Fifty-five percent believe that 5G will have a significant impact on the industry within three years, and an additional 20% believe that 5G will have a significant impact in four to five years.
McIntyre predicts the accelerated disruption in banking is likely to change the overall industry structure. “Technology — including social, mobile, analytics and cloud — has transformed financial services over the past five years and become core to banks’ operating systems. Banks need to evaluate the technologies that are likely to drive the next wave of disruption; we refer to these technologies collectively as DARQ: distributed ledger, artificial intelligence (AI), augmented reality and quantum computing,” said McIntyre.
Nearly half (47%) of the bankers surveyed believe that AI will have the greatest impact on their organization in the next three years. According to the “DARQ Power” trend, banks can reduce costs 20 to 25% by augmenting their operations using AI.
While more than half of banks are piloting or have adopted AI in one or more lines of business, somewhat surprisingly 20% are not planning on implementing AI or evaluating it for adoption.
At the same time, 19% of bankers said they believe that, of the four DARQ technologies, quantum computing will have the greatest impact on their bank over the next three years — while only 17% said the same about distributed ledger/blockchain technology, perhaps an indication that early adopters of blockchain technology are feeling jaded.
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