Welcome to 2019, a potential tipping point for banking.

The turn of the calendar to a new year is a suitable time to pause and consider, in prognostication fashion, how dynamic drivers may further shape retail and commercial banking over the next 12 months.

As significant market forces propel the industry forward, banks’ responses will net either greater disruption or refreshing bliss—flavored, of course, by market-specific traits. Here, our Alan McIntyre offers his predictions on 10 key trends worth bankers’ attention in 2019:

1. Cracks in unbundling and fragmentation

More industry breakup due to Open Banking? Undoubtedly. Banks can seize growth from it in new areas, like aggregation and back-office support, and re-bundle the parts into value customers want.

2. The year when profit and value diverge?

Digital-leading banks will need to show investors ROE gains from their transformation efforts in sync with bestowed premium valuations. If they can’t, then we may see some digital bubbles burst.

3. Advice bar rises from products to promises

With Erica, Alexa and other AI assistants more frequent in banking, a new class of digital advice may emerge for hyper-relevant help that gives customers more rewarding financial outcomes.

4. The twilight of US community banking?

Despite a favorable market, small US banks lack growth. Their snag? Offering better digital services without huge investments. If they can’t, then they will lose more business to digital leaders.

5. The Chinese are coming

China’s payments pioneers, like Alipay, are shaping markets in Asia and Europe, and heading West. Time to ask how much impact we’ll see in 2019, and if it will come from sole acts or joint ventures.

6. The tipping point for UK fintechs

As UK banking newcomers attract clear share of business, incumbents are upping their digital game. 2019 will reveal what’s stronger: the drive of new entrants to win long term or traditional banks’ power to defend.

7. The beginnings of build and migrate

Last year’s interest in new core banking system alternatives like Mambu—mostly for simple retail and SME banking customers—will expand to broader build and migration, even for traditional banks.

8. Head (and brain) in the clouds

The public cloud migration debate is now on the intelligent brain: knowing what to do with data once it’s in the cloud to give customers more value. It will define winners of digital banking.

9. Time to make your move

Big techs’ banking march is not news. Yet, with PSD2 fueling payments options, pushes for app-based payments, white-labeling prospects and other cues, 2019 may see big techs show a definitive hand.

10. Welcome, “platform” police

Banks thinking about being a platform business must be very specific about their enabling business model, without ambiguity. For sure, the word “platform” will get banned in at least one bank in 2019.

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There is a sense that 2019 may turn out to be a critical year in the evolution of the industry and a year in which the old world gave way to the new.

Alan McIntyre

Senior Managing Director – Banking

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