# Banking in 2018: Plus ça change Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2018-01-20 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: 2018 EMEA Banking Trends: Digitalisation, Platformification Meta Description: Discover the key trends shaping EMEA banking in 2018, from the digitalisation of corporate banking to the growth of fintech and regtech in emerging markets. URL: https://financedigest.com/banking-in-2018-plus-ca-changehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd200118-1-1736843059237-compressed.jpg) _**Alex Kwiatkowski**, Senior Industry Consultant, Global Banking Practice, SAS UK_ Another year’s over, a new one’s just begun. And it’s time to answer that most crucial of questions: ‘What does 2018 hold in-store for EMEA banking?’. Unless I’m missing something obvious, all the signs point to the coming 12 months being characterised by the usual ‘evolution not revolution’, and anybody hankering for radical change between now and December 31st had best prepare to feel the cold hand of disappointment. I’ll [stop short of saying that banking](https://www.financedigest.com/swiss-national-bank-raises-rates-says-bank-crisis-stopped.html "Swiss National Bank raises rates, says bank crisis stopped") is boringly predictable, but with its overall course having been set some years earlier – characterised by the drive to digital transformation in an era of macroprudential regulation – there’s nothing either on or over the horizon which is going to act as a seismic force. There’ll be disturbances and distractions as the year unfolds, but no disruptions. Sorry. Taking this into account, and having given my crystal ball a thorough polish, the following trends are going to manifest themselves in the EMEA [banking industry](https://www.financedigest.com/enabling-decision-making-success-in-the-banking-industry-3-considerations.html "Enabling decision-making success in the banking industry – 3 considerations") over the coming 12 months. **Digitalisation of** [corporate banking](https://www.financedigest.com/bank-of-england-sets-out-plans-to-sell-23-billion-corporate-bond-stockpile.html "Bank of England sets out plans to sell billion corporate bond stockpile") Corporate [banks finally get hip to digital](https://www.financedigest.com/being-the-best-digital-bank-is-not-enough.html "Being the Best Digital Bank is Not Enough"), as the general murmurings of service dissatisfaction among national and multinational companies prove impossible to ignore. There’s already been some digitalisation of the back office (e.g. cash management), but in 2018 progress will extend through the middle office (where new banking products are created) and into the front office (where relationship [managers get their hands on the digital](https://www.financedigest.com/geometric-progression-based-on-digitization-to-be-witnessed-by-reproductive-management-products-market.html "Geometric Progression based on Digitization to be witnessed by Reproductive Management Products Market") tools to make a) their job easier and b) their client(s) happier). **Platformification efforts accelerate** ‘Platformification’ is a truly dreadful word. Hard to pronounce. Sounds like ‘fornication’. Vague. And yet it’s one of the most significant developments in banking. For the uninitiated, platformification is “ _the bundling together of multiple services onto one online platform, and provides an efficient, automated and integrated customer experience_” (source: [Forbes](https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/omribarzilay/2017/06/13/why-banks-are-going-to-survive/&refURL=https://www.google.co.uk/&referrer=https://www.google.co.uk/)). At the risk of stating the obvious, those three outcomes are highly desirable for banks, as in combination they drive [improved financial and operational performance](https://www.financedigest.com/panasonic-delays-production-of-new-tesla-battery-to-improve-performance.html "Panasonic delays production of new Tesla battery to improve performance"). Platformification also puts [banks on a similar plane to other industry](https://www.financedigest.com/how-is-green-finance-reshaping-the-banking-industry.html "How is green finance reshaping the banking industry?") sectors (e.g. retail), although any CEO who thinks his or her firm is about to [become the Amazon of banking needs](https://www.financedigest.com/banks-need-to-become-a-lifestyle-brand.html "Banks need to become a lifestyle brand") to lower their expectations. **[Technology innovation boosts](https://www.financedigest.com/product-innovations-and-advancements-in-technology-to-boost-automotive-ignition-system-market-growth.html "Product Innovations and Advancements in Technology to Boost Automotive Ignition System Market Growth") financial inclusion** Connecting – and reconnecting – people to the financial system remains a priority across EMEA (and the rest of the world) in 2018. While improvements have been made in recent years to close the gap between those who can access to [banking services](https://www.financedigest.com/the-gmp-cell-banking-service-market.html "The GMP Cell Banking Service Market") and those who can’t, progress needs to go at a faster pace. This necessitates national governments, financial service providers (traditional and non-traditional), telcos and technology vendors (device manufacturers, ISVs, app developers etc.) working collaboratively. An impossible dream? Nope. **Growth of fintech and regtech in emerging markets** During the last quarter of 2017 I’ve seen ample evidence that fintech and regtech is beginning to proliferate in EMEA’s [emerging markets](https://www.financedigest.com/allergy-immunotherapy-market-emerging-players-may-yields-new-opportunities-2017-2025.html "Allergy Immunotherapy Market: Emerging Players May Yields New Opportunities 2017-2025"). This will continue during the next 12 months (and beyond), with new firms entering the competitive environment. It [doesn’t take a genius to deduce that it’s trend intrinsically linked with improving levels of financial inclusiveness](https://www.financedigest.com/diversity-and-inclusion-doesnt-have-a-finish-line-dont-make-it-a-race-to-perfection.html "Diversity and inclusion doesn’t have a finish line: don’t make it a race to perfection"). Exciting times are ahead. **Understanding EU-wide [stress tests](https://www.financedigest.com/demystifying-us-feds-approach-on-systemic-climate-risk-stress-testing.html "Demystifying US Fed’s approach on Systemic Climate Risk Stress Testing") in an era of IFRS 9** The latest round of EU-wide [stress testing](https://www.financedigest.com/stress-test-backs-extending-lifespan-of-two-german-nuclear-plants-sources.html "Stress test backs extending lifespan of two German nuclear plants: sources") commences in January. We’ll need to wait until November 2nd to see the results, but extra significance is assumed as this is the first assessment undertaken in the era of IFRS 9 – the standard which specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items. I’m not expecting shocks, but there _might_ be a surprise or two to make things interesting. **Blockchain in lending and trade finance** Blah-blah-blah-blockchain. I’m bored of talking about it. What I _really_ want to see is [blockchain technology](https://www.financedigest.com/how-blockchain-technology-can-help-the-fashion-industry-make-verifiable-green-claims.html "How Blockchain Technology Can Help the Fashion Industry Make Verifiable Green Claims") taking root in areas other than the frankly insane world of cryptocurrencies. Blockchain has been slower to [come out of the lab and into the live environment that I anticipated a couple of years](https://www.financedigest.com/food-fiber-market-to-exhibit-increased-demand-in-the-coming-years.html "Food Fiber Market to Exhibit Increased Demand in the Coming Years") ago, but my senses tell me that this will change in 2018. Lending and [trade finance are two obvious areas where blockchain can disturb the status](https://www.financedigest.com/u-s-congress-votes-to-strip-russia-of-most-favored-trade-status-ban-its-oil.html "U.S. Congress votes to strip Russia of ‘most favored’ trade status, ban its oil") quo by reducing the need for paper-based processes (and sounding the death knell of the fax machine). And then there’s the [blockchain analytics](https://blogs.sas.com/content/sascom/2017/12/15/practical-approach-blockchain-analytics/) angle to explore too. We’ve already started. Catch us if you can. **Extension of [open banking](https://www.financedigest.com/what-does-2022-hold-for-open-banking-some-predictions-from-the-ecosystem.html "What does 2022 hold for open banking? Some predictions from the ecosystem") standard(s)** Within the more advanced economies of EMEA, the concept of open banking – which is where [banks make the transition to be marketplaces for financial services](https://www.financedigest.com/becoming-more-than-a-bank-adding-value-through-financial-solutions-as-a-service.html "Becoming more than a bank: adding value through financial solutions as-a-service") (see ‘Platformification’ above) – has taken the industry by storm. To weather a storm, protection in the form of an umbrella is required. In this instance, the umbrella takes the form of an open banking standard, which uniformly prescribes the steps which firms must take. Developments such as PSD2 have hastened standardisation, but there’s still a huge amount of scope for further improvement. In Europe, a collaborative effort is being made by AIB Group, Bank of Ireland, Barclays, Danske, HSBC Group, Lloyds Banking Group, Nationwide, RBS Group and Santander to create an open API standard. I [expect to see more ‘groupthink’ examples emerge as the year](https://www.financedigest.com/global-automotive-brake-system-market-is-expected-to-witness-a-rise-of-3-cagr-between-the-forecast-years-of-2020-2030.html "Global Automotive Brake System Market is expected to witness a rise of 3% CAGR between the forecast years of 2020-2030") unfolds. **Beginning the preparations for regulatory adjustments** 2018 will witness some major regulatory developments. There’s the go-live for PSD2 and GDPR in Europe, while at a [global level](https://www.financedigest.com/global-covid-19-cases-hit-250-million-eastern-europe-infections-at-record-levels.html "Global COVID-19 cases hit 250 million, eastern Europe infections at record levels") Basel IV begins to take a firmer shape. And although the rollback of Dodd-Frank is going to [hit US banks](https://www.financedigest.com/polands-bank-millennium-third-quarter-results-hit-by-payment-holidays.html "Poland’s Bank Millennium third-quarter results hit by payment holidays") hardest, the ripples caused by this development will scurry across the Atlantic to affect firms in EMEA (i.e. those who maintain operations in Trump-land) to varying degrees too. As every boy scout knows, success hinges on being prepared. **M&A activity is back on the agenda in the search for growth** Several EMEA banks have recently installed new CEOs, and they’re sure to be seeking ways to deliver sustainable [revenue growth](https://www.financedigest.com/microbial-rennet-market-overview-2022-2029-top-manufacturers-cagr-value-future-scope-revenue-growth-rate-and-forecast.html "Microbial Rennet Market Overview 2022-2029 (Top Manufacturers, CAGR Value, Future Scope, Revenue, Growth Rate and Forecast)") to keep their shareholders happy. This stimulates renewed interest in M&A activity, and while the era of the mega-merger is behind us, don’t be surprised if 2018 witnesses some unlikely unions. And with Chinese companies sitting on huge cash piles, who’s to say they won’t make a series of strategic investments to gain, or strengthen, a position of [potential power](https://www.financedigest.com/french-cloud-provider-ovh-lines-up-diesel-generators-to-offset-potential-power-cuts.html "French cloud provider OVH lines up diesel generators to offset potential power cuts"). **AI-fever takes hold, but some [banks will lose](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") their grip on reality** What’s that [deafening sound](https://www.financedigest.com/in-westminster-abbey-the-deafening-sound-of-silence-to-honour-queen-elizabeth.html "In Westminster Abbey, the deafening sound of silence to honour Queen Elizabeth")? Oh yes, it’s the wall of noise associated with [Artificial Intelligence](https://www.sas.com/en_us/insights/analytics/what-is-artificial-intelligence.html). There’s no denying that AI – and it’s ‘extended’ features, namely machine learning and [deep learning](https://www.sas.com/en_us/insights/analytics/deep-learning.html) – is going to transform not just banking but the entire world as we know it. However, I’ll just inject a healthy dose of reality. AI isn’t a magic wand. It needs to be handled carefully, and that means striking the right balance between humans and computers. Let’s use AI responsibly. There’s been enough recklessness in the world prior to AI bursting forth. **Wildcard** Finally, there’s my perennial wildcard. This is a low probability event, but one that would have a significant [impact on banking](https://www.financedigest.com/the-latest-trends-in-instant-payments-and-how-they-impact-banks.html "The latest trends in instant payments and how they impact banks") overall. Previous wildcards include President-elect Trump repealing Dodd-Frank\* (2017); Apple obtaining a banking license by partnering with an existing institution (2016; an established peer-to-peer lender being acquired by a [big bank](https://www.financedigest.com/big-bank-ceos-to-sell-lawmakers-on-relief-diversity-efforts-amid-economic-regulatory-challenges.html "Big bank CEOs to sell lawmakers on relief, diversity efforts amid economic, regulatory challenges") (2015); and Google using its long-held banking license in the Netherlands to launch a digital-only service (2014). For 2018, I’m going to stick my neck out and say that during 2018 the UK will halt the Brexit process, having come to the sensible conclusion that any benefits are massively outweighed by the drawbacks. Sadly, I’m 99 per cent certain this won’t happen, so it’s said more in hope than expectation. For brevity, I’ve provided short thumbnail sketches as to the 2018 trends in this blog. If you want the unexpurgated version, join me for a [**webinar**](https://www.sas.com/en_gb/events/2018/banking-speed-webinars.html) on **January 25th at 4 pm** (UK time) which goes deeper into the details: [SAS SPEED Webinar Series for Banking](https://www.sas.com/en_gb/events/2018/banking-speed-webinars.html) Happy New Year! \*I made this prediction prior to the Presidential election. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---