If one’s reading is focused on certain of the gloomier consumer newspapers, you would be forgiven for thinking that we live in crisis times. Typical examples include Brexit woes, political uncertainty in Spain, the idiosyncrasies of the US president and right-wing populist success in parts of Europe to name just a few.
And if your reading tends to focus on the banking sector, one might be persuaded that we are about to witness the biggest revolution in retail banking in our life times; certainly the biggest change in consumer behaviour since the launch of the ATM or the introduction of online banking.
For Open Banking evangelists in particular – of whom there are many – it almost seems sacrilegious to suggest to them that they calm down just a little. Their soundbites can generally be summarised thus: a raft of new entrants will teach the incumbents a lesson by offering a better, more personalised service.
Fintechs will do to banks what Amazon has done to many established retailers; PSD2 in general and open banking in particular will, forever change the landscape.
I would respectfully suggest that both groups, the professional prophets of doom and gloom on The Guardian and the fintech-obsessed trendies will be proved wrong, at least in the short term.
Some of us have been around for more years than we care to admit and would respectfully suggest that history tends to repeat itself.
The year ahead will be far better than the pessimists forecast and not remotely as exciting as the fintech fanatics prophesy.
There is every chance that North American economic growth will hit 2.5%. Trump is eccentric, yes, but surely not so dumb as to mess-up NAFTA negotiations. Employment rates and consumer confidence surveys remain strong.
For the banking sector, there is the near likelihood of the boost of further rate rises.
Business investment will rise and Trump’s tax amendments will be a net positive for the banking sector. Economic growth in the Eurozone in 2017 will exceed early year analyst forecasts and despite all the uncertainty in Catalonia and the likely economic own-goal for the UK of Brexit, unemployment rates across Europe are at their lowest level since 2009.
We might even witness banks in markets such as the UK tentatively, modestly, remembering their shareholders and reintroducing shares dividends -in recent years a policy almost exclusively the preserve of banks in countries such as Canada or more recently, the US.
It is also probably a safeish bet to suggest that a change of CEO at at least two of the UK’s biggest four banking groups will take place in 2018.
On Open Banking – and the January issue of RBI is full of 2018 forecasts referencing the subject – the market will remain fascinating to cover. Just as seven-day switching in the UK barely caused switching rates to increase above its dismal 2.5% to 3% range – consumer behaviour can at times be stubborn – customers are unlikely to embrace the fullest opportunities offered by Open Banking in its early days.
From what we have seen to date, none of the new entrants will become the Uber or Google of banking – in reality they will do well to migrate their existing customer numbers such as they are from their launch prepaid cards to full current accounts.
Banks will however continue to suffer some serious loss of the brightest and the best of their personnel to firms such as Google, Apple, Facebook and Microsoft as well as to exciting start-ups.
A year from now, many of the 2019 forecasts will proclaim that the New Year will be the year that open banking truly takes off and the year that the start-up banks begin to take market share from the incumbents – if of course in the interim they have not gone down the BPCE/Fidor or BBVA/Atom route.
Above all, the sector will remain hugely exciting to cover. A huge thank you to all subscribers, contributors, press officers, PRs and our events sponsors for their help and support this year: Merry Christmas and here’s to a healthy and prosperous 2018.