Banks will need to balance innovation and risk management over next decade – HSBC report

While technology and data advances will enable banks to offer hyper-personalized and automated services, they will need to find balance between innovation and risk management, HSBC report claims.

In its Banking of the Future, Finance in the Digital Age report, HSBC claims customers will have much more control of their personal data through digital ID profiles. In line with this, banks will seek to become “true brokers” in the management, development and safeguarding of the digital IDs and access to third-party services outside of financials, such as utilities and retail.

HSBC believes that by mastering data sources and analytical technologies, banks can improve understandings of customer needs and how to unlock new revenue streams.

Within a decade, HSBC states banking could become a largely frictionless experience for customers. Instead of seeking an assessment for each product category individually, like savings, borrowing and investment, it will be conducted in the background based on their data profile.

In its report, it claims digital voice activation will become the default channel for customer communication.

Despite the opportunities available, the bank stated it is essential for banks to managing risks around the new digital economy. Data privacy and cybersecurity are big factors in its foresight.

One of the areas which needs to be improved is around AI and how information is collected, presented and explained to consumers. HSBC believes more international cooperation is needed to take full advantage of new technologies.

HSBC global head of digital, data and development Josh Bottomley said, “The journey towards banking of the future will accelerate considerably over the next decade. Customers can expect a highly personalised service determined by their individual requirements, instead of being based around a set of savings, borrowing and investment products – each with their own sales and servicing characteristics.

“But for this to become a reality, banks will need to strike the right balance between what technology and data can enable to meet customers’ expectations, with the need to actively address risks to their wellbeing, as well as protecting the financial system.”

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