Four in ten banks see their business models evolving towards becoming a digital ecosystem – Temenos report

12 noiembrie 2019

Latin American banks and fintechs are racing toward financial inclusion, says new report by the Economist Intelligence Unit released by Temenos.

# Top strategic priorities for 2020 are migrating existing clients to digital channels (39%), humanizing the customer experience (38%) and cutting costs (35%)

# Nearly seven in ten expect peer-to-peer lending to be available on banking platforms by 2025.

The Economist Intelligence Unit (EIU), on behalf of Temenos, surveyed 405 global banking executives on the changes they see taking place in their industry to 2020 and 2025, their organizational response, and the longer-term impact on their strategic development. This focuses on how these retail banks are incorporating and advancing technology delivery for their current and future customers.

Key highlights include:

# Open banking is seen as a true opportunity; four in ten banks see their business models evolving towards becoming a digital ecosystem;

# Three in five respondents expect banks to deploy more computing power in the public cloud by 2025 than they currently deploy in all the private cloud data centers;

# New technologies like AI, machine learning, and blockchain have replaced changing customer behavior and demands as the key driver of strategic thinking at banks around the world in the short (36%) and longer-term (42%).

Temenos, the banking software company, announced that it has published the Latin American results for its annual retail banking survey, conducted by the Economist Intelligence Unit (EIU), ‘A whole new world: How technology is driving the evolution of intelligent banking in Latin America’.

To cash in on financial inclusion, banks need to invest in digital technologies such as cloud, mobile, omni-channel capabilities and analytics, while at the same time cutting costs or improving margins, a top priority cited by 35% of retail bankers for 2020.

According to World Bank figures, two in every five Latin American workers have no bank or savings account. Historical hyperinflation, economic volatility and poor credit infrastructure means banks often overprice risk, leading to high charges and interest rates. Cost is the reason 60% of the unbanked say they do not have accounts.

The EIU report highlights that politicians and regulators are taking action to make the banking system more competitive, and tackle the high cost of charges inhibiting consumers from pursuing banking services. New regulations such as Mexico’s Ley Fintech aim to open up the market by providing oversight for fintechs.

As competition and regulatory initiatives erode margins, banks are focusing on stripping out costs. Other immediate priorities include investing in digital technologies to deliver outstanding experiences and lower costs.

According to the report, 39% of respondents cite migrating client usage to digital from physical channels as their top strategic priority for 2020 followed by humanizing the customer experience (38%) and mastering digital marketing and engagement (32%).

Initiatives to open up the market seem to be working though. According to the report, competition is driving banks to act – with e-commerce growing fast, partnerships between the tech giants and fintechs rank second (cited by 31% for 2020) to payment players (44% for 2020) as the biggest, immediate non-traditional competitive threat to their business. Furthermore, nearly seven in ten (68%) respondents also expect peer-to-peer lending to be available on banking platforms by 2025.

To be able to deliver personalized, rich banking services at scale, with a low cost-income ratio, taking advantage of cloud-based technology will be vital for the region. Latin American bankers focus their digital investment on cybersecurity (47% compared with 39% globally) and cloud technologies (29%) which the report highlights may help Latin Americans to move from physical channels and cash to digital accounts, payment apps and intelligent data services.

Enrique Ramos O’Reilly, Managing Director – Latin America & Caribbean, Temenos, said:

“Banks need to digitally transform in order to create innovative ecosystems, move to the cloud to drive down costs and provide more accessible banking services, or offer highly personalized services to consumers. There is a definite need in Latin America for banking services that address consumer demands. That’s why banks like Prestanómico and Banco Azul choose Temenos. We offer the winning combination of the richest packaged banking functionality and the most advanced cloud-native, cloud-agnostic API-first technology delivering tangible business benefits to banks. With our solutions, Prestanómico enables customers to apply for a loan and receive a response within four minutes – their solution is so efficient that Prestanómico started offering “lending as a service” to process loans that are distributed by other financial institutions in Mexico. Banco Azul, a locally owned startup in El Salvador is one of the fastest growing banks in the country. We look forward to continuing to partner with banks in the region to expand the reach of financial inclusion and deliver outstanding customer experiences.”

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Gabriela Nistor – director general adjunct BT

Tendinţele pe care le-am remarcat înainte de începerea pandemiei s-au accelerat pe perioada stării de urgenţă. Am văzut acest lucru ca o oportunitate, un tipping point pentru bancă. Post-pandemie nu avem cum sa ne întoarcem la comportamentul financiar pe care îl aveam până în februarie a.c. Relaţia românilor cu online-ul s-a schimbat. In plus, cardul fizic se va dematerializa. Vom asista la o scădere a cererii pentru cardurile fizice, respectiv la o creştere a preferinţei pentru componenta digitală a acestora.”


In 23 septembrie 2019, BNR a anuntat infiintarea unui Fintech Innovation Hub pentru a sustine inovatia in domeniul serviciilor financiare si de plata. In acest sens, care credeti ca ar trebui sa fie urmatorul pas al bancii centrale in 2020?