Now, more than ever before, technology plays a huge role in how banks interact with customers and conduct business. As consumers continue to move into a highly mobile, always-connected world, banks need to implement innovative solutions to meet those needs. And technology also plays a key roll in analyzing and mining the massive amounts of data, both structured and unstructured, that banks now possess. And let's not forget the important role of technology in security, as financial institutions face near-constant cyber attacks from all reaches of the globe.
Bank IT departments will also play a key role as institutions seek how to best understand and utilize the bring your own device (BYOD) trend. As more employees and executives use their personal devices for work purposes, securing those devices --and the valuable data they contain -- will become of the utmost importance.
With all that in mind, Bank Systems & Technology polled a number of industry insiders to get their take on what the hot technology will be in 2013.
Dominic Venturo, chief innovation officer for payment services, U.S. Bank
I think mobile will continue to evolve to incorporate value-added services, rather than just things like checking a balance. For example, if a customer already uses mobile RDC, the bank has the ability to add a mobile bill pay to its platform using that same technology. I also think we'll see more activity in the daily deals and offers space connected to the banking relationship. That space is so dense, the consumer deals with too many choices that it bogs them down. Those offer platforms can then be challenged. Banks can use their customer data to filter out what is truly relevant, and present targeted offerings to consumers who do business with them. This is starting to happen with card-linked offers. One other thing, is that we are two years away from the date where EMV needs to be implemented in the U.S., banks are going to have to look ahead to that.
The Cloud Will Loom Large in 2013
Nicholas Brewer, senior analyst, Aite Group
2013 will see the level of bank investment in large and complex technology projects beginning to increase for the first time in almost five years. The specific projects may vary between core banking systems, complex CRM systems and various other kinds of enterprise banking solutions, but it seems clear that this change will be heralded by a few high profile decisions and announcements during the year, with traction rapidly being gained across a wide range of banking market segments. How will this investment be different from the spending pattern of a few years ago? 2013 should shape up to be the year that the cloud became both commercially acceptable and necessary to the banking community. Specifically, we should see an increase in the number and size of banks in developing countries choosing cloud deployments for their core processing systems, while larger banks look to dip their toe in the water by moving some of their key, non-banking software assets into the cloud. The reason for this is the unstoppable force of the logic of technology investment. The dramatic slowing down in the rate of improvement in server performance has made it, once again, economic to invest in platforms for long-term provision. This means that banks will need to decide whether they approach their IT infrastructure from the perspective of being either a consumer or provider of data processing and storage capacity; in either situation they will find that the drive to address the cloud is irresistible.
Mobility, BYOD and Enterprise Efficiency
Richard Ferrara, CTO,Woodforest National Bank
What's hot, as far as banking technology for 2013? As always, mobile will continue to be hot, especially with more and more devices making their presence known. Microsoft releasing Windows Phone 8, along with the Surface tablet and the ecosystem of Windows 8 should make things interesting. We plan to continue to enhance the mobile experience for our customers.
And mobility is not only for the customer. It's time to bring in mobility for workers so they can complete tasks from anywhere at any time. This, of course, ties into BYOD and all the security trapping along with it.
Employing technology to improve the enterprise doesn't stop at mobility and BYOD. Social tools and Big Data will help enterprises become more efficient. I like the idea of the social enterprise. Using email to share ideas seems very inefficient. Tools, such as SharePoint 2013, which includes some social components, or software that could plug into SharePoint, could be used to broaden the conversation and participation throughout the enterprise and reduce the dependence and clogging of email systems.
Finally, Big Data will probably continue to be a big buzzword in 2013. Big Data seems to tie into a broader business intelligence strategy along with social aspects associated with it. We aren't doing anything with Big Data just yet, but we might later in 2013.
The Year of Rationalizing the Cloud
Paul Schauss, President & CEO,
CCG Catalyst Consulting Group
The most significant technology for banking in 2013 will be the Cloud, and we anticipate that it will be the year of rationalizing the cloud -- when banks determine what the cloud means to them. While there is risk management and vendor due diligence involved, moving selected services to the cloud can eliminate upfront licensing costs, decrease under-used hardware, and deploy your internal IT staff to more-strategic and less-administrative projects. Banking IT executives will identify those applications or services that monopolize IT resources, services that can be used essentially out of the box, and services that are relatively mature in development, like office automation or email. The best cloud strategy will balance the bank’s appetite for risk by customizing a cloud deployment that utilizes some combination of public, private, and hybrid cloud environments. While core banking might not soon move to a fully public cloud, those ancillary and support services like HR management, CRM, content, and others will see higher cloud adoption rates. As the industry comfort level with cloud computing grows, so will the number and criticality of the systems that move to the cloud.
The Most Important Banking Technology of 2013: Digital Payments
Ginger Schmeltzer, senior vice president, emerging payments, Fiserv
In 2013, the lines between the physical, online and mobile channels will continue to blur. Consumers no longer bank exclusively or even primarily at the branch, increasingly preferring the online and mobile channels. Likewise, purchases and payments are increasingly moving from the physical world to the virtual one‚ look at the growth of electronic bill pay, person-to-person payments, e-commerce and m-commerce. However, consumers still visit bank branches, just like they still visit brick and mortar retailers and still mail some checks. Digital payments will only be successful if they can bridge over into the physical world, helping consumers move their money easily regardless of which channel they are using. In the end, it's the consumer and the recipient‚ biller, merchant, friend, and relative‚ who matter most in this equation. Design a digital payment experience that solves the pain points they have -- even if they don't realize now that they are pain points - and they will adopt it. With the ever-growing number of players in this space, someone will get that design right this year, laying the foundation for future widespread adoption of digital payments. Financial institutions have an opportunity to be a leader in the changing world of payments, but they need to act now.
All About Mobility
David Potterton, VP, Global Research, IDC Financial Insights
I think mobility is really changing the game for banks and I don’t know if they fully appreciate to what degree. It's not just another channel, its changing the whole dynamic of how your customers and prospects deal with you. Banks can't dictate how they interact with customers anymore, now they dictate to you and that shifts the power.
There's also a fundamental shift in how mobility is used internally. The bring-your-own-device trend needs to be sorted out. You need to figure out who needs to use what devices, for what applications, and are those applications something we will build or get from a third party? There are implications for security, training and device management. So IT has to work on both sides; external customers interacting with the bank in a mobile, always-connected way and the internal employees as well.
Dr. Stuart C. Wells, EVP, chief product and technology officer, FICO The top challenge facing the bank technology community in 2013 will be leveraging Big Data in a way that benefits banks’ bottom lines. Despite the hype surrounding Big Data, few organizations have figured out how to operationalize it and make it pay off for the business.
Analytics is the key to unlocking the potential of Big Data, and 2013 is the year that many banks will turn to Big Data analytics to move their organizations forward. For example, fraud monitoring today can be inconvenient and even embarrassing for consumers when payment card transactions are erroneously declined. Big Data has the power to enhance individual fraud profiles, making them more dynamic, context-aware and personalized. This can eliminate “false positives,” increasing customer satisfaction and loyalty while making fraud prevention more precise and less intrusive. Big Data analytics is also the key to “Big Marketing,” enabling banks to take a more sophisticated approach to marketing that merges risk management, capital management and mass personalization. The net result is the ability to optimize the t’s and c’s of every offer, the timing of every offer, and the packaging of every offer to dramatically increase campaign response rates, maximize ROI, and manage risk.
Banks that fail to recognize the potential of Big Data analytics will soon find themselves struggling to compete and remain relevant.
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio