UK FINANCIAL
SERVICES
DIGITAL TRENDS
REPORT- 2020
David Reilly,
Let’s Learn Digital

ABOUT
DAVID
REILLY
20 years experience in digital marketing,
emerging technology and digital
transformation
Founder of Let’s Learn Digital, delivering
quality training and in digital transformation,
business strategy and emerging technologies
Sector experience includes Financial
Services, Insurance, Payments, Utilities,
Retail and Automotive
2

OUR VISION
Provide training that inspires knowledge,
understanding and new thinking about how
technology might shape business in the future

PURPOSE
OF THIS
REPORT
This 2020 Digital Trends in Financial
Services report examines the leading
technologies and drivers which are reshaping
this sector by bringing clarity to help readers
determine which technologies will drive the most
value in the future and provides guidance
around those worth.
We examine the underlying forces which are
disrupting the future role, structure and
competitive environment, new technologies, new
challenger banks, Brexit, the emergence of
FinTech and the regulatory framework. The
Financial Sector is hugely important to the Uk
economy representing 11% of tax revenues and
over one million financial services jobs, two
thirds of which are outside Greater London. FS
companies will need to decide how to respond
whether to reshape the future, be a fast follower
or manage a strategic defence. Staying the same
is not an option.

ARTIFICIA
L
INTELLIGE
NCE (AI)
Interest in AI and Machine Learning will continue to grow in
2020. How customers’ data is used and protected will take
on ever greater prominence. While financial services are
arguably already one of the most heavily regulated sectors
for the use of data, rules must be revised to keep pace with
the emergence of new data sets such social media,
developments in data science and new analytical techniques.
Data privacy and the responsible and legal use of algorithms
is going to be a huge topic in finance and the UK will wish to
be at the leading edge of its development in finance
A key ethical issue of AI is how do we ensure the right
parameters are set and data is used so that the machine
behaves in the way humans would agree is ethically ‘right’.
This has significant implication for financial inclusion, where
we need to demonstrate why people get turned down for
applications such as personal loans, mortgages or insurance.
An issue being discovered in testing is biases contained in
the data so that machines in some cases are essentially
trained to be racist, sexist or otherwise discriminatory in this
decision making.
Responsible AI principles, such as fairness, accountability,
transparency, security and responsible usage will need to be
agreed among the leading authorities including the FCA,
Bank of England and UK govt.

DATA UTILISATION
With enhanced sources of data and technology to process
insights, there is an unparalleled opportunity to proactively
identify consumer needs to match the appropriate products or
service. Beyond using a simple demographic, product
ownership and risk-based profile, banks and credit
organisations can deliver greatly improved results by
combining both traditional and non-traditional data
Today, financial marketers and product managers have access
to incredible rich lifestyle and psychographic data, purchase
data, channel preference insights, brand loyalties, geo-
location data and even insights from social media use. These
enhanced insights, when combined with advanced analytics
provide an incredible rich seem of data
The result is highly personalized communication delivered to
the device or platform the consumer prefers. Executed well,
this also can increase the prospect market beyond what was
possible before, reaching previously underserved consumers
like the unbanked who may only have a “thin file” with less
data available.

BLOCKCH
AIN AND
DISTRIBUT
ED
LEDGER
Blockchain had a mixed year across industry in 2019
but much of the validated quality user cases are
coming from The Financial Services Sector. Blockchain
allows the transfer of digital ownership through a
constantly growing chain of time-stamped records
called blocks, and the proclaimed impacts of this
technology seem endless, being touted as disrupting
existing banks in areas such as payments, loans and
trading
Consensus has been gradually emerging that
blockchain is an interesting technology that opens up
new possibilities for Financial Services. However, it is
neither the solution to every challenge nor a
replacement to every existing utility, there are hurdles
to implementation, including technical, scalability and
regulatory barriers
In 2020 we expect to see more sophisticated
conversations about Blockchain’s limitations. We’ll see
fewer experimental proofs of concept (some of which
could never become reality at scale and are little more
than vanity projects, and more solid examples of how
it can really benefit the industry

OPEN BANKING
Open banking launched just over a year ago, a
government-backed initiative which means
banks must share customers’ information with
other authorised providers on request.
Banks will only share this data if given explicit
permission, and it’s up to customers if they wish
to do so, to gain new insights into their finances
or to get a better deal on financial products. The
objective is to make banking fairer and more
transparent and encourage new product
development, but it’s taking longer than
expected to take off.
Although awareness is considered low, and
people are rightly cautious about sharing their
financial data, the number of people taking
advantage of it is increasing. This year we
should see banks and fintech's start-ups
collaborate better, and communicate the
benefits more effectively, hopefully resulting in
more people buying into how open banking can
help them.

THE RISE OF FINTECH
London’s Fintech or ‘Financial Technology’ has become a formidable
disruptive force across the world, challenging the status quo of the
fresh approach to on problems faced by customers. An added
positive is the regulatory thrust to the adoption of technology in
solving long-standing issues of financial inclusion and transparency
in financial dealings. As an example the need for widespread fintech
adoption in payments is a result of limitations in the current
ecosystem to address the need for seamless customer experience.
Not only is Fintech facilitating huge innovation it is also creating
avenues for digital transformation and by default new sources of
revenue for banks. Banks are now being forced to reinvent age old
business practices to offer a wider spectrum of services which will
allow them to compete effectively with the lean, agile and innovative
fintech start ups. Fintech’s influence in FS will only increase over
2020 and beyond

ROBOADVISERS
Roboadvisers in one form or another, like Nutmeg,
WealthFront and Acorns, have been around for a
while now and have opened up the route to simple
investing for many people through technology. This
intelligent automation gives processes the power to
learn from prior decisions and data patterns to
make decisions by themselves reducing the cost of
administrative and regulatory processes by at least
50% while improving quality and speed.
Robotic process automation in banking also
improves compliance processing by keeping
detailed logs of automated processes, automatically
generating the reports an auditor needs to see, and
eliminating human error. Since it’s intuitive and
easy to re-configure software robots at any time,
tweaking processes to fit new or updated
regulations is never difficult.
Recent data shows 37 per cent of UK financial
services firms have implemented robotic processing
automation (RPA) but only 28 per cent of global
firms have adopted the technology, (Source PwC
Data Oct 2019) We expect in 2020 robotic
processing automation (RPA) will become ever more
sophisticated and increasingly give people access
investment options based on their choices and
values.

SIZE AND SCOPE
OF DATA
BREACHES
CONTINUES
The financial system is a constant target for
cyber criminals and regulators need to maximise
their efforts to keep up with this dynamic threat.
This ever increasing problem is destroying trust.
, the size and scope of attacks continues to grow
based on data breach statistics. According to
Experian, there have now been 10,800 data
breaches reported over the past 9 years. 2018
was a record-breaking year, but 2019 is now
shaping up to be an even worse year for data
breaches. It is now more important than ever for
organizations to keep up with data breach
trends and upgrade their defensive cyber
capabilities in response
The key part missing in the UK cyber defences
today is an industry wide response template to
for institutions. Building a strong model for data
recovery should be a priority for industry. The
financial sector can help small to medium sized
businesses manages cyber risks, build resilience
and recover from incidents through wider access
to cyber insurance products. Safe guarding the
financial industry from evolving risks will
continue as a serious challenge

ADAPTING TO CHANGING
DEMOGRAPHICS
People are living longer in the UK. By 2030 its is predicted more than a fifth
of the population may be above 65 and this could rise to over a quarter in
2050. Coupled with this is the rising cost of long term care the burden of
which will fall to families. People have to save more to reflect longer
retirement periods and will need access to savings products to accumulate
wealth and products to help ensure a steady income in retirement
This is a serious challenge for the Financial Services sector because quite
simply many are not saving enough for their retirement. More than seven in
10 adults have no investments and of those that do, only 35% have in excess
of £10,000 and only a third of UK adults make no private pension provision.
There is also the growing shift towards the “gig” economy where 3 million
work. While flexible/gig economy employment offers a number of benefits to
the individual, it does not include employer pension contributions. We
expect to see more debate and discussion around retirement security is one
of the most important financial priorities

RISE OF
BIOMETRICS
Biometrics is taking centre stage as a
means to strengthen security without
simply adding more forgettable PINs
and passwords. Its application in
mobile devices is increasingly
extending beyond simply opening
the device to guarding the
applications within them. From open
banking apps and digital wallets, to
m-commerce and in-app purchases,
consumers are rapidly realising the
benefits biometrics bring to
managing and protecting their
financial lives. Banks in particular
are increasingly using voice and
imaging technology to verify their
customers’ identities, for example
KFC in China and the retail giant
Alibaba have both tested letting
people pay by smiling
Introducing biometrics can also
enable stakeholders to foster greater
consumer trust and safeguard
privacy concerns. There is potential
for this technology to provide an
extra layer of security and combat
fraud and it’s an area that we believe
in 2020 will continue to rapidly
develop

CHATBOTS AND
CONVERSATIONAL
INTERFACES
More banks in the industry are deploying AI-driven bots to drive
customer service, but success so far is mixed. Chatbots are not yet
capable of fully comprehending a user’s request. Slangs,
abbreviations, and grammatical errors stand in the way of complete
understanding between a client and a digital assistant.
Within financial services, start-ups are shaking up the industry by
integrating chatbots to deliver immediate and insightful information
to consumers. However, next to these start-ups, the use of chatbots
in the financial services remains in an early stage. For many
companies, it is not easy to create an intuitive chatbot experience
that both brings value to wide array of digital savvy consumers. We
believe there will be more investment in conversational interfaces but
chatbots should only be used as a complementary to the customer
experience

SHIFT IN PAYMENT
HABITS
Payment habits are changing fast.
The proportion of transactions using
cash has fallen from six in 10
payments a decade ago to just under
three in 10 in 2018 according to UK
Finance. Put simply, we are using
less cash and the cost of other
alternatives like crypto-currencies
are looking more and more attractive
Payments are the number one area of
innovation for big tech platforms and
new entrants and UK Fintech is
already one of the most vibrant
ecosystems for new players in the
world. The Uk financial services
sector will want to keep pace with
customer demands for payments
that are seamless, reliable, cheap,
and above all secure. In light of the
potential for continued innovation,
London Fin Tech eco system
alongside the FSA Bank will need to
keep on top of digital payment
developments and make sure the
regulatory, legal and infrastructure
implications are understood, and
financial stability safeguarded.

THE CLOUD
BECOMES THE
NORM
Cloud technologies have now
matured to the point they can meet
the high expectations of regulators
and financial institutions. Shifting
from in-house data storage and
processing to cloud environments
can also accelerate innovation,
enable use of the best analytical
tools, increase competition and build
much needed resilience. This is
important for mid-sized firms
upgrading to the cloud which
provides the material improvements
of cyber-security. The cloud is
important for UK financial firms to
innovate and compete not just at
home but also internationally
In 2020 we foresee the scope of the
public cloud growing further,
incorporating convenient payments
enablement, billings, and loan
management. Fintech companies will
opt for available-everywhere-
anytime cloud service instead of
using inflexible hardware. The
international teams will be the first
ones to adopt such systems as this is
a comfortable solution for cross-
border management.

AND
COMING
SOON

FACEBOOK
PORTAL?
Facebook’s Portal device is a smart
screen/camera that can either
integrate with your TV or enable
video calling via a screen that is
larger than your phone. The smart
camera moves and pans to track
your movements meaning that users
can move around while speaking to
the person on the other end, and
the camera also automatically
widens if there are more people in
the shot, making family calls easier
to manage.
The potential for Financial Services
is Video communications can be
made via Messenger or WhatsApp,
and the hardware has Alexa built in
meaning that it can also be
controlled by voice. One to watch

BRAIN-COMPUTER
INTERFACES
A brain–machine interface
(BMI) is a device that
translates neuronal
information into
commands capable of
controlling external
software or hardware
such as a computer or
robotic arm. In September
2019, Facebook bought a
‘brain-machine-interface’
startup called CTRL-labs
that is working on ways for
people to control devices
simply using brainpower.
Currently, the technology
is designed to tap signals
that the brain is sending to
the hand via a wristband
worn by the user, but
Facebook believes that this
kind of technology could
revolutionise how we
interface with hardware.
One to watch for the future

QUANTUM
COMPUTING
The financial sector has many
transactions run by algorithms.
Using quantum computing would
exponentially increase the speed
of these transactions, allowing
institutions to scale their
processing with lower costs as
opposed to employing more
human or IT resources. Thus,
quantum computing is
increasingly attracting the interest
of financial services firms that are
seeking to boost their trade,
transactions, and data speed.
The future promise of Quantum is
faster processing power made
possible because, in quantum
computing, data is represented
using qubits as opposed to
traditional binary units (0 and 1).
Quantum systems are still in the
early stages of their development
with its adoption within the
financial industry expecting to
take at least ten years. One to
watch

SUMMARY FOR 2020
The UK Financial Services sector is transforming more and more into a digital
first sector. A digital economy means the use of cash in the UK is declining
rapidly.
Investments into alternatives like Crypto currency and Blockchain enabled
services will continue
The use of data is increasing rapidly. Taking a strategic view on data is a
fundamental starting point for a digital transformation and this means
understanding the role and purpose of data in the organisation, its value and
how the organisation wants to use it
Continual investment in technologies like AI, Machine learning and
conversational interfaces can boost productivity and innovation and meet the
ever changing needs in the population
The Fintech Eco-system in London will continue to thrive and provide a great
link between larger established brands and new start-ups

Thank you
Our digital innovation training courses:
https://www.letslearndigital.com/cours
es
Our Corporate Innovation training
https://www.letslearndigital.com/corporate-
innovation
Contact David Reilly
david@letslearndigital.com
07989 985922