In the past year, banks all over the world have announced that they would be making redundancies and investing in new technology and automation.

In the UK, TSB declared that an additional £120 million will be spent on improving the bank’s digital product, as well as automating some branches. It also predicted that by 2022 90% of transactions with the bank will be self-service.

Technology increasingly plays a significant role in the reshaping the banking industry landscape, from in-branch initiatives to new fintechs and the increasing use of AI tools.

So, what can we expect as more disruptive trends emerge in the new year?

Why are banks investing so heavily in technology?

Banking needs are changing rapidly: the number of people wanting face-to-face banking, dedicated account managers, cheque books and paper money is dwindling.

This is largely caused by technological advances rendering most of these services unnecessary for the large majority of banking customers. Instead they are increasingly demanding digital, app-based banking services that can match their on-the-go lifestyles. Indeed, this week, Royal Bank of Scotland has opened its new digital bank Bó after almost two years of preparations to compete with start-ups such as Monzo and Starling.

The result is that banks are cutting jobs in branches and middle/back office support for those services that no longer have the customer numbers to support them.

How has the rise of challenger banks led to incumbent banks making this move?

Challenger banks are certainly showing incumbent banks how lean a bank can be, when starting from a blank piece of paper without legacy infrastructure.

However, incumbent banks are aware that their business models have been founded on having many more bums on seats and they can’t simply change business model (other than spinning up new, lean digital banking brands!). So they are slowly investing in technologies that gradually make bits of the bank redundant, but this is not “led” by the rise of challenger banks.

What does the future hold?

The future looks bright; fintech globally is maturing and there is increasingly a move from the smartphone-driven app/UX-driven approach to addressing issues with the underlying legacy infrastructure and philosophies of the range of financial services. In the next year I expect to see further innovation and investment in a sector that is still searching for the right tools and services to properly service its changing customer needs.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.