Open banking establishes new access to banks’ networks, creating additional security issues

As more markets adopt open banking — which mandates banks to open their systems to third parties — it will be increasingly critical for banks to ensure the security of not only their networks, but those of their ecosystems partners as well, according to a report from Accenture that predicts key technology trends in banking over the next three years.

Trust and security posture are becoming important considerations of ecosystem partners

While consumers trust banks to securely hold their data, maintaining that trust as the industry shifts toward open banking will require banks to strike the right balance between robust security and easy-to-use customer experiences.

While nine in ten bankers (92 percent) believe that customer trust in banks’ ecosystem partners is very or extremely important, only 31 percent 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.”

The Accenture Banking Technology Vision 2019 report draws on the analysis of an advisory board of more than two dozen individuals, interviews with technology luminaries and industry experts, and results of a survey of nearly 800 bankers globally.

This year’s report, with the theme “The Post-Digital Era is Upon Us — Are you Ready for What’s Next?,” showcases five upcoming technology trends — including “Secure Us to Secure Me” — that banks should assess to help set themselves apart from the competition, whether traditional banks, fintechs, big tech companies, or other yet-to-be-determined newcomers.

The “Get to Know Me” trend

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 percent) and a more powerful way to understand customers (83 percent). 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.

“Digital tools can provide banks with new, near-real-time information about their customers and help them identify unmet customer needs,” McIntyre said. “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 illusive ‘segment of one.’”

The “My Markets” trend

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.

Nearly four in five bank executives (78 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.

More than half (55 percent) believe that 5G will have a significant impact on the industry within three years, and an additional 20 percent believe that 5G will have a significant impact in four to five years.

“The accelerated disruption in banking is likely to change the overall industry structure,” McIntyre said.

“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.”

Nearly half (47 percent) 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 percent 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 one in five (20 percent) are not planning on implementing AI or evaluating it for adoption.

At the same time, 19 percent 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 percent said the same about distributed ledger/blockchain technology, perhaps an indication that early adopters of blockchain technology are feeling jaded.

The “Human + Worker” trend

The report’s fifth trend, “Human + Worker,” notes that in addition to keeping up with customer-driven innovation, banks also need to keep pace with the innovation demanded by their workforce.

Three-quarters (74 percent) of bank executives believe that their employees are more digitally mature than their organization, causing the workforce to wait for the bank to catch up.

As banks continue to adopt technologies to advance their organizations and as employees increasingly change roles or move between organizations, training and reskilling is in high demand.

Nearly half (45 percent) of bank executives surveyed said that more than 40 percent of their workforce has already moved into new roles requiring substantial reskilling, and 71 percent expect that within three years more than 40 percent of their workforce will move into new roles requiring substantial reskilling.