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Customer intelligence will be the most important factor for revenue growth and profitability. Financial institutions are increasingly using artificial intelligence to deliver highly personalised services. Over the next decade, we expect artificial intelligence, machine learning, and behavioural analytics to become the driver of customer engagements. Financial institutions that invest in big data and advanced analytics capabilities will be more likely scale quickly and grasp a competitive edge.

Changes in data regulations mean that financial institutions are now required to more openly share their customers’ data with other providers. Open banking is revolutionising how consumers transact, save, borrow, lend and invest their money. Open data initiatives will create more competition within the industry and financial institutions will have to compete with non-traditional players. This will fundamentally change the payments value chain, disrupt traditional business models and increase customer expectations.

Consumers today are experiencing an explosion of choice when it comes to paying for their shopping and general purchases. Digital payment systems have changed the way we manage and pay for goods and services. Businesses and consumers alike are wanting faster, safer and more convenient payment methods. Mobile and social payments, digital currencies and eWallets are becoming widely adopted as the norm - forcing traditional players to react strategically. The intersection of new payment technology will require banks to reassess the way they participate in the payment ecosystem.

Financial institutions cannot afford to wait any longer to extract the potential of digital to industrialise their value chain. They must explore the new tools at their disposal and build the skills in digital marketing and analytics necessary to compete effectively. Fintech emergence will have positive returns for traditional players who embrace disruption through strategic collaboration. By creating a customer-centric, unified value proposition that extends beyond what users could previously obtain, digital leaders are bridging the value chains of various industries to create “ecosystems” that reduce customers’ costs, increase convenience and provide them with new experiences.

New profit pools such as customer acquisition, customer advice and technology services will grow faster than the traditional banking book and yield higher margins than holding loans and deposits on the balance sheet. Forward-looking financial institutions recognise that alternative business models present an opportunity to break into new markets, acquire new customers while retaining existing customer relationships.

Banks will likely have to accelerate partnerships with fintechs, retailers or large technology firms. Investment in emerging technologies such as artificial intelligence, application programming interfaces (APIs), and blockchain will underpin and drive innovation and competitiveness. Alongside the technology aspects, an ever-changing and uncertain regulatory climate will remain a challenge. Financial institutions should be scenario planning for Brexit and be prepared for a lengthy disentanglement of the UK from the EU. Ethical consciousness will continue to play a huge role in strategy planning as customers continue to demand brands to be more ethical, more sustainable, and more diverse and inclusive.