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By: Marcelo Marquez de la Garza, director, Worldwide Financial Services at Microsoft
A new year gives us the opportunity to take a look at what we learned in the past 12 months, and think ahead to what we’ll see in the future. Susan Hauser, CVP, Enterprise and Partner Group at Microsoft recently shared what Microsoft believes will be the top business technology trends that will shape 2015 across a variety of industries. Today, I’ll dive deeper specifically on the trends we see impacting financial service industry moving forward.
A series of recent reports and outlooks from 2014, mixed with stronger economic data, points to an increase in major areas in banking technology spending for 2015 and beyond. It’s not all rosy, however; much of 2015 technology investing will be geared toward solving the challenges currently affecting the industry.
As we look ahead to 2015 from a banking perspective, three key themes rise to the top: digital banking, big data analytics, and cyber security.
An Increase in Digital (and More than just Mobile)
It’s no surprise that digital is changing the way we bank, and we expect to see even more of the digital revolution to take place in 2015. A recent PwC study predicts that in 2015, for the first time, digital banking is set to overtake branch networks as the preferred way for customers to interact with their bank.
February 2014 polling found that 88% of US internet users ages 18 to 34 used online banking to pay monthly bills, make deposits and withdraw money. Nearly half said they performed such activities on a mobile device. However, older generations are jumping on the trend as well. Nearly 2.3 million people aged between 70 and over 100 years old are now using internet banking, according the British Bankers Association, while more than 450,000 customers over 60 are harnessing banking apps on smart phones or tablets. This trend is only expected to grow exponentially over time, and is a major factor for the further investment in digital technology.
Although digital banking is closely tied to mobile banking, the digital aspect of banking encompasses much more. The development of interactive interfaces that improve user-experiences and better merge the real and the virtual aspects of banking are an area of potential further development in 2015.
A larger common adoption of social media and collaboration technology is also another area of potential expansion in 2015. During 2014, the banking sector started to witness the empowering attributes that a solid social platform can have in improving the interaction between customers and employees. In 2015, those gains will continue to grow.
Big Data Will Become Mainstream
The mantra of “predict and understand the customer” will be core to technology investments in 2015. A good portion of this trend is to enable banks the ability to find innovative ways to better use customer spending data for specialized promotions and services through the use of Big Data analytics and cloud computing. This view of data analytics also includes using Big Data to better understand market trends, potential investments, better calculate risks, and ultimately drive better decision making.
Recent IDC research shows us that the companies that take a comprehensive approach to data stand to realize an additional 60 percent return on their data assets — a worldwide opportunity of $1.6 trillion. As we reinvent productivity at Microsoft we’re helping businesses use data to their full advantage and this includes building tools that are more predictive, personal and helpful.
In 2015, businesses will begin to fully make use of big data services in the cloud. I believe this is the year when big data will move from something people are trying to define, to a transformative tool with the combination of the cloud and cutting edge predictive analytics
The ultimate goal and potential outcome of the attention to analytics will be a positive impact on the balance sheet from an increase in cross-selling efforts, a decrease in customer attrition attributed to improved customer relationship programs, and a heightened ability for banks to better invest in services and products that produce stable deposits.
The Ongoing Threat of Cyber Security Will Require Banks to Respond Even More Quickly
Unfortunately, 2014 was a year full of alarming cyber-attacks and data breaches notable by both their number and sophistication. One troublesome vulnerability within the banking sector was the links to POS and the retail sector. In 2015, there will be a necessary and stronger collaboration between retail, credit and banking organizations as banks search to close the gaps and minimize the high-profile nature of a breach or cyber-attack. Driving the need for the finance and banking sector to respond to cyber-attacks quickly is an abnormally high customer churn rate and cost per beach rate within the finance sector.
One of the major changes we’ll see to help prevent fraud in 2015 is a migration to Europay MasterCard and Visa (EMV), a new technology to protect consumers and reduce the costs of fraud. EMV is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Coming in October 2015, merchants using non-EMV compliant devices that choose to accept transactions made with EMV-compliant cards assume liability for transactions that are found to be fraudulent. In 2015, we expect this compliance requirement to drive a massive move to modern card technology and modern points-of-sale devices. That translates to better security for banks, merchants and consumers.
2015 has the potential to be a turning point in the banking sector. The potential that digital, analytic and security technologies has is unmatched by the impacts to not only the corporate balance sheets but customers alike. At the core of these three pillars of technological investment is a focus on driving operational efficiency, better understanding the customer, and protecting data, intellectual property and the financial well-being of our economy and its citizens. We look forward to making great strides in the coming year!