… The truly “hot” technologies in banking are the ones that financial institutions invest in—not necessarily the ones the pundits talk about… In Cornerstone’s What’s Going On in Banking 2021 study, the top five technologies for 2021 are: 1) Digital account opening; 2) Application programming interfaces (APIs); 3) Video collaboration; 4) P2P payments; and 5) Cloud computing.
1) Digital Account Opening
Consumer digital accounting opening is the most popular technology for the fourth year in a row—with banks (finally) leading the way here… Nearly half—44%—of banks and a quarter of credit unions expect to add a new or replacement consumer digital account opening system in 2021.
2) Application Programming Interfaces (APIs)
APIs jumps from the #5 spot last year to #2 on the list for 2021, with roughly one in four institutions planning new investments… Going into 2021, only 30% of banks had deployed APIs, but that’s up from the 21% that had done so going into 2020.
… The growth in API deployment among banks and credit unions is more focused on efficiency (i.e., cost and speed). That’s OK, but it still leaves the threats of fintech competitors and the opportunities from fintech partnerships unaddressed.
3) Video Collaboration
One in four financial institutions are planning to invest for the first time in this technology in 2021. Going into 2020, only 20% of banks and credit unions had already deployed these tools—heading into 2021, that percentage is roughly 30%.
… Consumers’ continued use of branches has little to do with their desire to go to a physical location, and a lot to do with their desire to interact with a person.
The problem to solve: Without good video collaboration tools, it’s been hard for consumers to find the right person to talk to, and then actually interact (if and) when they do find the right person.
4) Person-to-Person (P2P) Payments
For 2021, about a quarter of banks and a fifth of credit unions expect to select a new or replacement P2P tool. That’s down from the roughly 30% who expected to deploy one in 2020, which, in turn, was down from the 35% who planned to do so in 2019.
Zelle has become the 800-pound gorilla in the space, with roughly 500 institutions currently offering its P2P tool—including nearly all of the 25 largest banks… The PayPal app is installed on nearly two-thirds of smartphone owners’ devices, and 40% of them say they make P2P payments through the app every week… Apple Pay, Google Pay, and Venmo are found on fewer smartphones, but among consumers that do have these apps on their phone, about a third say they use them every week to make P2P payments.
Bottom line: P2P payments isn’t a winner-take-all game. Consumers use different apps depending on who they’re paying or getting paid by…
5) Cloud Computing
The percentage of banks that have deployed cloud computing increased significantly in 2020, going from 32% at the end of 2019 to 40% at the end of 2020. Half of credit unions are already there.
While there are still holdouts to cloud computing, the general sentiment in the industry has shifted over the past few years to the point where many (if not most) banks and credit unions believe they are on an inevitable journey to the cloud.
What About Artificial Intelligence (AI)?
For all the hype surrounding AI-based technologies like chatbots, machine learning, and robotic process automation, few financial institutions beyond the 25 largest are doing much with these tools… most mid-size banks and credit unions don’t have the internal resources to experiment with and develop AI-based solutions.
Over time, this will become less of an issue as AI becomes assimilated into—or indistinguishable components of—banking applications.
Will Banks Jump On The Crypto Bus?
Cornerstone’s consumer research has found that roughly 15% of Americans hold some form of cryptocurrency like Bitcoin. But that was three months ago… Cornerstone estimates that consumers made more than $30 billion in retail purchases using cryptocurrencies in 2020.
… If banks are sincere about being “customer-centric” and listening to the “voice of the customer,” they’ll start becoming more interested. A consumer survey from NYDIG found that 80% of Bitcoin holders would move their Bitcoin to their bank if it provided secure Bitcoin storage.
Prediction for 2021: The combination of the recent regulatory guidelines concerned the provision of cryptocurrency services by banks and the run-up in the price of Bitcoin will finally lead to some forward-thinking banks and credit unions to start offering crypto investing services to their customers and members.