Software AG shares predictions for banking and tech in 2017

Source: Software AG. Schulz.

With increased digitalisation in the financial services industry and disruptive fintech technologies in Southeast Asia, Software AG tbelieves there will be implications for the banking industry in Asia Pacific for 2017.

Anneliese Schulz, VP at Software AG Asia, said: “There will be some seismic shifts in the banking industry in 2017, as threats and opportunities from digital banks, fintech and regulation continue to shake the business landscape in Asia.”

Software AG forecasts that regulation and market forces are combining to transform the way that people bank, and banks operate. The result will be greater choice and competition for customers, and the possibility of entirely new revenue lines for retail banks.

Another prediction is that banks will begin to fully operationalise insights to be gleaned from client data by using predictive analytics and machine learning in 2017. New revenues for banks will depend on how efficiently they can monetise real-time data.

Banks will also start investing in fintech and digital banks. While traditional banking has the distribution and greater trust (at least among older generations), fintech and digital-only banks have newer, more agile technology. There are culture differences however, leading to Software AG's description of "some awkward courtships, but marriages will happen".

Robo-advisors - computer-generated advice on investment - pose a threat to traditional asset management. Given a rising interest rate environment, which few active portfolio managers have experienced, Software AG sees more automation through robo-advisors, and consolidation in asset management as well. This prediction is echoed by Accenture, which recently found that eight in 10 consumers in Singapore would welcome robo-advisory services for their banking, insurance and retirement planning.

Software AG further predicts more bank branches closing down or evolving as customers adopt mobile and online banking. As banks digitally transform and focus on costs, they will transition remaining branches to low volume/high value activities. Most banks will maintain smaller anchor branches to provide a brick-and-mortar presence versus purely digital competition.

Schulz concluded: “As banks begin to operationalise data, open up and partner with competitors and scale back on the physical world while investing in the digital world, we will start to see which ones will thrive in the new open banking environment.”