The 2020 ISG Provider Lens Banking Industry Ecosystem Report for the UK finds banks in the country interested in cloud-based core banking systems, instant payment technologies, automated anti-money laundering services, and API-led applications. The COVID-19 pandemic has accelerated adoption of digital platforms in the UK with banks and merchants pushing for a cashless society.

ISG partner Bryn Barlow, said: “The pandemic has fast-tracked the move in the U.K. toward online transactions. Banks are looking for better coordination between their own platforms and their customers’ digital information and records."

The report notes the ongoing exit of the UK from the European Union will require banks in the country to decouple their networks, including payment and know-your-customers systems, from the EU. For UK banks to become a competitive financial hub outside the EU, they will need to invest in cutting-edge technology and business processes.

In addition, the report notes many UK banks are closing branches to fund their digital initiatives. Newer and larger banks have begun offering online-only banking services, resulting in several growth opportunities for technology service providers.

Banks in the UK are focused on retaining customers and attracting new ones through new services driven by technology, the report adds. Many banks are offering easy-to-use treasury management, supply chain and credit products in an effort to compete with FinTechs. While banks in the UK have been on the forefront of next-generation payment systems, FinTechs and other new challengers are pushing the boundaries of the payment ecosystem further with API-led service portfolios that include virtual payment cards, instant payment options and loyalty-based credit.

As a way to increase agility, many UK banks are realising they need to modernise their legacy core banking systems, the report adds.

In addition, banks in the UK are looking to artificial intelligence and other new technology tools to improve their know your customer and anti-money laundering systems, the report says. A large number of banks are moving toward automated anti-money laundering checks to improve scaling and speed and to reduce false positives. In some cases, service providers are partnering with smaller FinTech companies to develop integrated solutions.