Consumer banking trends to watch in 2019, according to this software analytics firm

SINGAPORE (Dec 26): 2019 is set to be a year of significant progress for banks around the world, according to analytics software company FICO, formerly known as the Fair Isaac Corporation.

In a note on Wednesday, FICO’s vice president and general manager for risk, Tim VanTassel, highlights three areas of concern within the consumer banking sector for bank executives to address as the New Year approaches.

Deposit pricing strategy is one currently-neglected tactic which he believes will become prevalent among the world’s top banks, in response to competitive pressures.

This involves investing in sophisticated analytics tools, like optimisation, as well as the ability to rapidly deploy the models developed by those tools such that banks are able to deliver smarter and more granular pricing.

“In our current rising rate environment, any bank that can’t grow (or at least sustain) its deposits base will face shrinking net interest margins and a competitive disadvantage in their consumer lending businesses. Indeed, we are already starting to see signs of distress among community and regional banks that lack the advertising budgets and sophisticated digital capabilities of the big national banks,” notes VanTassel.

Recognising and working to address the negative effects of silos is also bound to start a trend – as banks begin to prioritise transformation on the organisational level rather than just adopting new technology, he adds.

According to VanTassel, siloed business units and technology stacks for credit risk, marketing, fraud and compliance works “extraordinarily well for maintaining the status quo”, but performs poorly on the contrary when it comes to large-scale transformation.

“Banks will increasingly recognise this and work to ameliorate the negative effects of silos as they shift from product-centric to customer-centric business strategies,” says the VP.

Lastly, VanTassel sees an increased focus on the evolution or “maturing” of emerging payment solutions, most notably mobile wallets and peer-to-peer (P2P) payment networks, as the trend’s overall growth continues to accelerate in the coming year.

“The faster these new payments move, the more attention they will attract from criminals. Emerging payment solutions will become more mature in 2019 as payments executives focus on educating their customers and adapting their fraud controls to compensate for this growing threat,” he predicts.