Two additional trends in the global retail banking industry are growing collaboration with FinTech firms for point-of-sale (PoS) financing and blockchain solutions for KYC implementation. These trends are discussed below in detail with suitable examples and data.

Growing Collaboration With FinTech Firms for Point-of-Sale (PoS) Financing.
Getting traditional loan approvals from retail banks cost customers a lot of time, effort in doing paperwork, and extra fees. Hence, more and more customers, especially millennials, that are not attracted by credit card balances or traditional loans are turning towards technology-driven point-of-sale (PoS) financing.

A customer survey conducted by Payments Journal has revealed this shifting spending behavior of customers. 28% of the respondents said that they would prefer PoS financing for their online payments, while 39% of the respondents agreed to spend more if they would be given PoS financing option. 76% of the respondents confirmed their preference to purchase if their payment would be done vide PoS financing.

The PoS financing market in the United States alone is currently estimated at $391 billion and is gaining significant traction among online shoppers.

The growing popularity of technology-driven point-of-sale (PoS) financing has been capitalized by FinTech firms that have disrupted the traditional retail bank industry by providing innovative, digital solutions to the shoppers of the present generation. These FinTech firms have included large e-commerce companies, traditional retailers, and payment companies in establishing a PoS lending ecosystem.

The PoS financing system creates a win-win opportunity for merchants and retailers as it leads to increased sales, improved cashflow, increased customer base, and a positive image of the company among customers.

As retail banks are falling behind in advanced technology-driven financing solutions, they have recognized the need to collaborate with FinTech firms to establish their presence in the PoS financing market. A joint survey of retail banks by EBA and Finextra has revealed that 81% of retail banks want to collaborate with FinTech partners to implement digital transformation.

Suntrust Bank, Fifth Third Bank, and BMO Harris Bank NA have partnered with Atlanta-based FinTech firm Greensky to consolidate their PoS lending business. Greensky connects banks, merchants, and consumers and has helped fund loans of value more than $12 billion. The FinTech firm has helped retail banks to gain more than 1.7 million new customers.

Blockchain Solutions for KYC Implementation
Know Your Customer (KYC) is a vital element of identity management and helps retail banks track and prevent financial fraud, money laundering, and terrorist financing. However, the KYC implementation and compliance process is stringent, long-drawn, and complex. This often leads to bad customer experience and affects customer loyalty.

There is no worldwide standard for the KYC implementation process and it varies from one retail bank to another. This leads to extra work for the bank employees when banks and financial institutions collaborate to verify the identities of the customers. Also, compliance with the ever-changing governmental regulations proves to be a costly and labor-intensive process for retail banks.
As part of their daily business operations, banks have to automate real-time intra-bank, inter-bank, and third-party data exchanges. Also, customers have to transfer their private data to the bank server whenever KYC checks are done. Hence, there is a possibility of the data and private information being hacked by malicious people.

To prevent extra cost and redundant work, cybersecurity risks, and customer hassles in KYC implementation and compliance, more and more retail banks are exploring blockchain, or distributed ledger technology to streamline their KYC implementation and compliance processes.
Under the blockchain system, a retail bank customer will face the KYC implementation process only once after which the blockchain architecture automatically allows them to confirm their identity without facing any third-party verification processes. The blockchain architecture allows retail banks to collect customer information from multiple sources into a consolidated, cryptographically secure, hack-proof, and unchangeable database.

Top Indian retail banks like SBI, HDFC, and ICICI have joined the BankChain community, a group of 37 global banks that aims to use blockchain for KYC implementation. Other global retail banks like HSBC, OCBC Bank, and Mitsubishi UFJ Financial Group (MUFG) have successfully tested KYC blockchain architecture.