Throughout the past decade, the banking industry has dramatically evolved. Aggressive competition and regulatory pressures have always been a challenge. Now, competition from FinTechs and non-financial services firms, an explosion of new technologies, and soaring customer expectations have spurred unprecedented industry changes that compel banks to develop new strategies. BigTechs with substantial customer bases (such as Google, Amazon, Facebook, Alibaba, and others) are venturing into retail banking and disrupting profitable areas of the value chain. With the BigTech threat looming, banks are embracing the open banking API-led economy and collaborating with third-parties to offer new-age services. Digital transformation enables banks to provide new and better products and services while controlling and reducing operational costs. Banks are adopting Distributed Ledger Technology (DLT) and artificial-intelligence-based voice assistants to improve efficiencies and customer experience. Similarly, data analytics, machine learning, and AI are being used to drive process improvements and seamless services. This analysis of the top-10 retail banking trends for 2019 aims to help readers understand the fast-changing dynamics of the banking ecosystem.

1. Top-10 Trends in Retail Banking: 2019
Capgemini, November 2018

2. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 2
10. Data Security and
Compliance
8. Artificial Intelligence to Improve
Customers’ Financial Lives
9. The Rise of Invisible Banking
5. Digital Banking Transformation
6. Distributed Ledger Technology
7. Voice Assistants – A New
Channel for Banks
1. Bigtechs are Entering the
Banking Space
2. Open Banking - APIs Set to
Play a Key Role
3. Accelerated Path to Adopt
Cloud Solutions
4. New-Age Operating and
Business Models
Open
Bank
Intelligent
Bank
Deep
Customer
Insights
Data-
Driven
Compliance
Top-10 Trends in Retail Banking: 2019

3. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 3
BigTechs Emerge as a Threat to Existing Banking
Businesses
Source: Capgemini Financial Services Analysis, 2018; Capgemini’s World Retail Banking Report 2018
45.8%
Banking Executives
perceive BigTechs as
a disruptive force
37.5%
Banking executives
view BigTechs as
contributor to
banking ecosystem in
2020
Huge Existing Retail Customer Base
Fully Digitized Operations
Effective Data Utilization
Leveraging Open APIs
Advantages for BigTechs

4. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 4
Opportunities
Promotes innovation and
competitiveness in
industry
Banks may face increased
disintermediation
Enhanced scope of service offerings
and better customer experience
Data privacy and protection
Personalized Offerings No standard frameworks in place
APIs enable collaboration
Banks would have to adjust their
operating and
business models
Threats
Open banking Gains Momentum, Provides Opportunity
as well as Threats to Banks
Source: Capgemini Financial Services Analysis, 2018

5. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 5
68% Shortage of skills
61%
Significant cultural
challenges
60%
Integration with
legacy systems
41%
Require external
support to choose
right platform
88%
Improved
organizational agility
84%
Revenue up, operating
cost down
41%
Allocation of cloud
budget on PaaS
in next three years
27%
Cloud native is core
part of overall
cloud strategy
Cloud Promises Major Gains but Not Without
Challenges
Note: Percentages indicate executives who had agreed with gains and challenges with cloud native approach
Source: Capgemini Financial Services Analysis, 2018; Capgemini Perspectives: Cloud Native Comes of Age in Banking
Gains with Cloud Native Approach Challenges with Cloud Native Approach

6. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 6
Changing Industry Dynamics Demand New-Age
Operating and Business Models
Monetize APIs through revenue
sharing or usage based models
Refining technology to support
changes and growth in agile
manner
Drive revenues from non-banking
services
Expand scope of services
through collaboration
Automation of operations to
enhance customer experience,
save on cost
Changes to Consider in Business and Operating Models
Having increased focus on
advisory in bank branches
Source: Capgemini Financial Services Analysis, 2018

7. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 7
Banks are Accelerating Digital Transformation Efforts
95.8%
Offering customers a
better experience
75.0%
Cost reduction
measures (including
automation, process
streamlining, etc.)
58.3%
Developing new
products / revenue
streams
90%
Financial services firms who
have commenced digital
transformation activities
Source: Capgemini Financial Services Analysis, 2018; Capgemini’s World Retail Banking Report 2018; Fujitsu, "'Digital Transformation of Banking Services' to Propose Future Banking Sector Business Models", July 12,
2018, http://www.fujitsu.com/global/about/resources/news/press-releases/2018/0712-02.html
Banks’Driversfor
Transformation(%),2018
30%
Digital transformation
activities that have yielded
results
Shift Towards Digital

8. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 8
Impact of Distributed Ledger Technology (DLT) on
Banking
Enhanced Transparency
Higher Trust
Quicker Transactions and
Settlements
Lower Transaction Costs
Improved Operational
Efficiencies
Key Benefits
Source: Capgemini Financial Services Analysis, 2018
Greater Reliability

9. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 9
Voice Assistants – A New Channel for Banks
145%
Smart speaker installed base is
forecasted to grow from 40.8
million in 2017 to 100 million
in 2018
19.4%
Users say they will use voice
assistants instead of a mobile
app or website, and this usage
will increase to 30.9% in the
next three years.
24.4%
Users say they will use voice
assistants instead of a visiting
a shop or a branch, and this
usage will increase to 40.2% in
the next three years.
Source: Capgemini Financial Services Analysis, 2018; Canalys Estimates and Forecasts, Smart Speaker Analysis, June 2018; Capgemini Financial Services Analysis, 2018; Capgemini Research Institute, Conversational
Commerce Survey, October–November 2017, N = 5,041 consumers in the US, UK, France, and Germany
A New Engagement Channel
Key Benefits for Banks
Deliver Personalized and
Contextualized Services
Conversation Ability to
Build Human Empathy

10. Retail Banking Trends 2019 | October 2018 © 2018 Capgemini. All rights reserved. 10
Banks are Leveraging AI to Improve Customers’
Financial Lives
Chatbots
Source: Capgemini Financial Services Analysis, 2018; Autonomous Next, “Augmented Finance and Machine Intelligence,” https://next.autonomous.com/augmented-finance-machine-intelligence
Artificial Intelligence Use Cases in Banking
Anti-Fraud and Risk Credit Underwriting
Voice Assistants KYC / AML
Smart Contracts
Infrastructure
Authentication and
Biometrics
Monitoring
Complex Legal and
Compliance Workflows
Front Office Middle Office Back Office
More Mature
Less Mature

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Entering the Invisible Banking Age
Source: Capgemini Financial Services Analysis, 2018
Drivers Implications
Competition from non-traditional
firms such as FinTechs and
BigTechs
Banking will become a seamless
part of your customer’s lives
New age platforms influencing
customers expectations
Banks need to efficiently utilize
their data and build partnerships
with third parties
Need for a frictionless banking
customer journey
Ensure data security and privacy
Proliferation of technologies such
as analytics, voice-based
conversation, and AI
Human interaction and advice
should not be ignored

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New Business Models and Technologies Compel Bank
Investment in Data Security, Compliance
Source: Capgemini Financial Services Analysis, 2018; The Economist website, “Whose customer, are you? The reality of digital banking,” Renée Friedman, May 21, 2018, https://eiuperspectives.economist.com/financial-
services/whose-customer-are-you-reality-digital-banking; Gemalto website, “More than 2.5 billion records stolen or compromised in 2017", April 11, 2018, https://www.gemalto.com/press/pages/more-than-2-5-
billion-records-stolen-or-compromised-in-2017.aspx
21%
Conforming to data
protection and
privacy regulation
19%
Customer online
security and fraud
Biggest Challenge Bank Faces Concerning
Data and Third-Party Access 71%
Banking executives say
cyber security is primary
focus area of banks digital
investments
88%
In 2017, 2.6bn records were
stolen, lost or exposed
worldwide, around 88%
increase from 2016
12%
Industries such as
healthcare (27%) and
financial services (12%)
experienced the largest
breaches

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