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Your bank has your trust.
Can fntech make you love it
1 The Economist Intelligence Unit Limited 2017
SYMBIOSIS:
YOUR BANK HAS YOUR TRUST. CAN FINTECH MAKE YOU LOVE IT
2 Executive summary
3 About this report
5 Introduction: Symbiosis
6 Section one – customers
10 Case study: With power comes responsibility
11 Section two – compliance
15 Case study: Fit for purpose
15 Case study: Who do you trust
16 Section three – cost of capital
19 Case study: nCino: the need to streamline
20 Section four – symbiosis
25 Case study: The Swedish design ethic
26 Conclusion
27 Appendix
CONTENTSSYMBIOSIS:
YOUR BANK HAS YOUR TRUST. CAN FINTECH MAKE YOU LOVE IT
EXECUTIVE SUMMARY
What will become of the nuns, the homeless and the Bank of England governor, Mark Carney, as retail banking goes
fully digital
Since the 1970s Banco Popular of Spain has relied on unique contracts with the Catholic Church for nuns to supply back-
offce support. Digitalisation, email and apps may render their non-spiritual roles obsolete.
And in the Nordic region, cash is fast becoming a rarity. Banks no longer worry about germ-laden banknotes and robbers
equipped with guns. But how do you give money to the homeless if physical money no longer exists Luckily, Denmark’s
MobilePay has an app for that.
What if fat money disappears entirely Will Mr Carney be made redundant if crypto-currencies become the norm No, but
government-sanctioned e-currencies are a real possibility.
The fourth global retail banking report from The Economist Intelligence Unit fnds an industry in fux but more certain about its
future.
In previous years, banks feared that fnancial technology (fntech) frms would steal all their lucrative business lines. But
domination is harder and more expensive than assumed. Fully automated banking may never happen. Although retired
investors love Skyping their grandchildren, they do not want to talk fnance with a chatbot.
So incumbents and fntechs must learn to mix old and new. Collaboration might even make us love our banks.
To measure how traditional players and fntechs can co-exist, The Economist Intelligence Unit surveyed 200 senior retail
banking executives about regulatory, customer, security and technology infuences on the industry up to 2020.
l The regulators will decide. Capital and compliance will shape incumbents and newcomers alike. Domestic regulators warn
fntechs not to expect an easy ride.
l Into the unknown. American banks worry about regulation the most, despite a promised rollback. European policy direction
is more certain, yet onerous. Geopolitics do not help.
l Resistance is futile. The EU’s Second Payment Services Directive and open architecture are the game changers. Banks may
lose their customers’ loyalty, fntechs could hit compliance barriers. Both must collaborate to survive.
l Complacency is not a virtue. Fear of peer-to-peer lenders and robo-advice may have peaked. Non-banks could still steal
deposit and lending business—and proft—unless banks improve the customer experience.
l No cash, no cheques. If they are smart, banks may still win the war to build truly universal digital networks.
3 The Economist Intelligence Unit Limited 2017
SYMBIOSIS:
YOUR BANK HAS YOUR TRUST. CAN FINTECH MAKE YOU LOVE IT
ABOUT THIS REPORT
In November 2016 The Economist Intelligence Unit, on behalf of Temenos, surveyed 200 global banking executives to
investigate the challenges retail banks face in the years to 2020 and how they are responding.
Respondents were drawn from across the world, with 60 banking executives from each key region—Asia-Pacifc, Europe and
North America—and 20 from the rest of the world. Just over half (101) work for commercial retail banks, while 20% work for
private banks, 15% in savings, 12% in community banksand the remainder in credit unions.
This year a bigger share (65%) work for smaller banks with under US$10bn in assets. One in six (17.5%) work for banks with assets
over US$250bn. Their responsibilities range from fnance and general management to IT lead, with 4% of respondents working
in risk roles.
In addition, in-depth interviews were conducted with 36 senior executives from banks of all sizes, start-ups, venture capitalists
and mutual fund managers. Our sincerest thanks are due to the following for their time and insight (listed alphabetically).
Ram AhluwaliaChief executive, PeerIQ
Lou Anne Alexander Group president, payments, Early Warning
James AndersonExecutive vice president, digital payments, Mastercard
Pat AntonacciManaging director, head of services and support, Americas and UK, SWIFT
Steve ArnisonDirector, LexisNexis Risk Solutions
Peter BrookeManaging director, fnance, FTI Consulting
Ilan BuganimChief technology offcer, Bank Leumi
Ian Clowes Chief executive offcer, Payment Cloud Technologies
Christopher ColeExecutive vice president and senior regulatory counsel, Independent Community Bankers of America
Tony CraddockDirector general, Emerging Payments Association
Olivier CrespinGroup head, Digital Bank, DBS Bank
Neal CrossChief innovation offcer, DBS Bank
Mike FotisFounder and chief executive offcer, Smart Money People
Ofer FriedmanVice president, marketing, AU10TIX
Mark HorganChief executive offcer, Moneycorp
Vincent HuiGeneral manager and Head of personal banking, Bank of East Asia
Sue HutchisonGroup head, global payments solutions, treasury, D+H
Kevin JohnsonHead of Innotribe Innovation Programmes, SWIFT
Neira JonesAdvisory board member and ambassador, Emerging Payments Association
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