Visibly or not, Covid-19 has disrupted almost every industry globally and transformed existing ways of doing business for enterprises. The banking industry is no exception to this shift. Banks are making a digital transformation by shifting to new business models and introducing fully digital banking services to keep up with the digital banking trends of 2022.
In this article, we’ll go over the trends you should expect from the banking industry and which trends you should consider incorporating into your digital products such as banking apps etc.
1. Digital Banking Trends A Brief Overview
2. The Top Trends in Digital Banking
3. Expect a Thriving Digital Future for the Banking Industry
Did you know that more than half of adult Americans access their financial services via laptops and PCs? And why wouldn’t they choose digital mobility, control, and convenience over the time spent driving to a bank and waiting in line? That and the development of more secure technologies are good enough reasons to digitize banks — banks need automation, and digitally active customers need online services and mobile banking.
The answer to bank automation might lie in AI and cloud computing. These technologies can help transform digital banking, branchless banking, digital account opening facilities, and so on – digitizing the usual bank services and creating new ones.
For example, in the wake of the Covid-19 pandemic, many businesses will need steady cash flow to fight the aftermath. With the help of AI and digital transformation, banks can develop new products to simplify the process of acquiring funds to pay their employees' wages on time.
However, that doesn’t mean that customers can make do without the physical financial services, rather some of them still require the concrete structure of a bank, and others need a mix of physical and digital services. Introducing the concept of Phygital Services and Alternate Delivery Channels (ADCs), which can satisfy both types of customers. An example of the former is a specialized kiosk where customers can perform their routine tasks quickly and efficiently using digital services and digital payments in a specific physical space.
All in all, clients and businesses are becoming more dependent on digital banking services, and the recent trends in digital banking reflect that. The general direction of digital banking transformation is to:
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The latest digital banking trends can help banks make improvements and serve their customers' needs successfully.
Let's discuss some of the current trends in banking in more detail.
According to Raconteur research, trust is the second most considered factor while looking for financial products. Keeping in focus the current trends in banking and growing competition, banks need to build trust with their customers. This utmost need for trust has created the concept of radical transparency — a tendency to create an open and honest environment for a customer. It is about being transparent about your business, communicating the truth, and accepting mistakes. Customers expect this.
According to the latest digital banking trends, a bank will need to focus more on openness and transparency instead of just relying on the typical retail banking practices. For example, Monzo — a completely app-based online bank formed in the UK in 2015 — has more than five million users. Monzo has proven that with transparency, new financial institutions can quickly grab the market share of old-school financial institutions that have been present for centuries.
Big data, Artificial Intelligence I and machine learning (ML) encourage financial marketers to offer more personalization to consumers. In this digital era, personalization doesn't merely refer to fundamental data such as a customer's name. Instead, it includes knowing your customers' likes and dislikes and developing unique packages of banking products and services for each customer as per their requirements and desires. Each digital banks’ customer can get personalized financial trends.
According to Accenture, 74% of consumers say “living profiles” with more detailed personal preferences would be useful if they were used to curate personalized experiences, products, offers and banking solutions. Customers want organizations to understand their preferences quickly, especially when they have given complete data already. Personalized marketing for the best customer experience is the key. Traditional banks haven’t spoiled customers with such approaches and now is the perfect time for this.
The trends in digital banking for 2022 suggest using real-time AI-based bots to gather information about customer preferences. Financial marketers can leverage this data and advanced analytics to provide predictable personalization and delight their customers.
With the help of AI and ML a bank can:
By the way...
90% of global fintech companies are already relying heavily on artificial intelligence and machine learning. Find out how
There has been a massive growth in the use of cloud computing in digital banking innovation trends. Cloud computing is a concept in which computing services such as software, data warehouses, and networking tools are readily available on the internet.
We can expect a massive shift towards cloud computing in the banking industry for 2022 because it provides banks with such benefits as:
In addition to that, cloud computing helps banks in eradicating massive data silos. Financial institutions can mitigate the risk of losing data in case of any physical disaster or calamity. It also eliminates the need for physical servers, systems, and people to manage them.
There are still companies and banks out there that are doing heaps of manual data work. Unfortunately, upper management is busy checking manual work instead of formulating strategies.
Here’s how automation can change a bank’s internal business processes:
We can expect more traditional banking institutions to implement automated systems for day-to-day tasks such as back-office services and customer support. For example, any financial institution can get rid of data entry tasks by implementing Optical Character Recognition (OCR) systems. Banks are also introducing Robotic Process Automation (RPA) that can help implement error-free automation. That shapes a new image of finance industry.
With a rise in digital banking users, a bank cannot afford to have faulty server downtime. Even a few minutes can destroy the reputation and goodwill they created over decades. For example, State Bank of India’s system outage resulted in major revenue losses for the bank. More than 16,000 financial transactions take place on the platform every hour, so every minute counts.
These technical glitches have raised many concerns about the reputation and credibility of the institution. Thus, banks need to invest a considerable amount of time and money to ensure that their systems are always functioning error-free.
Banks and theft has a parallel relationship. With newer digital banking products and services, customers are now more exposed to the threat of losing money. Cybersecurity is now becoming a major customer demand for any digital bank.
According to a recent survey by CSIweb:
To ensure security and privacy banks need to:
Do you know?
Treat your system as it has already been compromised to implement more secured system.
Every bank needs to increase the speed of its bureaucratic working systems. Speed is something that can provide a competitive edge to any bank. Businesses now need to make decisions more quickly, requiring a trustworthy and quick banking partner to channel their funds more efficiently and rapidly.
According to a survey by Mckinsey, 59% of the banks lack the ability to have speedy systems due to a lack of cross-functional collaboration.
A user-friendly and intuitive graphics interface is now a major requirement of any service. Tailored mobile banking super apps are more popular than limited functionality tools. Customers prefer graphs, infographics, and interactive modules instead of the typical Excel sheets. So we can expect newer features and functionality from banking apps in 2021.
Today’s world dictates that banks work critically on their mobile apps and websites rather than their branches' interior designs.
The current generation is more appreciative of visualization in their day-to-day routine. User experience will now play a vital role in any financial institution's competitive edge. Digital banking needs to create visually appealing systems to retain their customers' attention and focus.
We can expect the introduction of more visualized, attractive, and trendy mobile apps in future digital banking trends. Banks will now invest thoroughly in creating innovative mobile banking apps, as customers need enhanced user experiences, along with functionality.
The interface is a kind of "bridge" between the user and the system. But what happens if this understanding between machine and man is not achieved?
With many digital trends just around the corner or fully in the development, it’s possible to spot some industry favorites. Here’s what you can expect in the years to come:
A real-life example of how banks can create a competitive edge in the market by utilizing the power of AI is George — an AI-based digital banking system developed by Erste Bank. Its simple, unique, intelligent, and powerful features have managed to create a loyal customer base of more than 6 million users across Europe within a short time, and it’s gained a competitive advantage.
Thankfully, AI-enabled chatbots can provide 24/7, customized banking services to customers in real time. AI-enabled chatbots can increase efficiency by 33% because they can solve the customer’s questions almost immediately and via using a single mobile app.
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A classic business case is integrating conventional payment services into non-banking companies, benefiting significantly, as, for example, the alliance of the Mexican BBVA and Uber.
To sum up, with the continuous and radical changes in technology, banks are also transforming themselves by taking advantage of technology. Covid-19 has disrupted every industry globally and forced enterprises to change their existing way of doing business. People and businesses are relying more on digital banking in their daily activities.
There are major banking industry trends that we can expect to reshape the banking landscape. Banks will start using advanced technologies such as AI, cloud computing, and machine learning to gain a competitive edge over others. The policies and standards of banks will become much more open and customized. Banks will introduce tailored products to cater to the new needs of their customers. New age customer service and support is something banks will need to act on quickly. Visualization, privacy, and cybersecurity will gain much more importance in the upcoming months.
If you are considering implementing digital banking solutions or establishing an online bank, give us a call. At Geniusee, we facilitate companies by providing essential services to gain a competitive edge by utilizing these digital banking trends.
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