The banking industry is undergoing a paradigm shift in which traditional players are struggling to stay relevant in terms of product offerings, future-ready innovations, seamless, and individualized customer experience at every touchpoint, and service engagement. Competition from BigTechs and challenger banks is adding complexity and encouraging banks to move beyond traditional products to meet hanging customer needs.
A new ecosystem has emerged – Open X, that is characterized by more effective and open collaboration with new industry players such as FinTechs facilitated by API application programming interface) standardization and shared customer data insights. Therefore, banks are exploring partnerships, new business models, avenues for growth, and ways to personalize offerings. Incumbents are exploring point of sale financing and unsecured consumer lending, and also enhancing their digital channels expertise to reach a broader customer base.
The growing influence of BigTechs, such as Google, Amazon, Facebook, and Apple, and other high-tech players has raised the bar for customer service and seamless user experience. Increasingly, banks are turning to design thinking methodology to understand the customer journey, extract deep insights, and develop a user experience across the customer lifecycle.
Advancements in technology also have created a gap between the existing skill sets of the incumbent workforce and capabilities needed to implement those technologies. Awareness is growing about the importance of building a future-ready workforce to retain ongoing relevance. To foster a digital mindset among bank employees, training programs are being designed and implemented. The intelligent bank of the future is on executives’ strategic radar screen.
Today’s cutting-edge technologies offer banks the opportunity to innovate existing processes to meet growing customer expectations. Banks are exploring machine learning (ML) and artificial intelligence (AI) to create a seamless customer journey across various bank-customer interactions. Know Your Customer (KYC) identity validation is a growing blockchain-enabled trend being explored industry-wide by major banks.
Investment in technology to meet regulatory compliance is a growing industrywide requirement encouraging established banks to collaborate with RegTechs. The goal is to realize the full potential of technology to meet guidelines and also to create a competitive advantage. Consortia of banks, RegTechs, and regulators are developing collaborative stakeholder ecosystems. Banks are investing in development programs both within and outside of the bank to meet changing market forces.
Trend 01: Digital-era workforce preparation has become a top priority
Retail banks are equipping employees with digital competencies to cope with rapid technology disruption in the industry.
Trend 02: Banks are collaborating with FinTechs to explore point-of-sale financing
Point-of-sale financing appeals to consumers who want more flexibility than traditional credit purchases allow.
Trend 03: Banks are slowly beginning to explore unsecured consumer lending through digital channels
The digital unsecured lending market is a new business source that many institutions have yet to exploit.
Trend 04: Blockchain solutions being used to improve KYC and identity management programs
Banks are looking to blockchain technology to streamline KYC and identity management programs to manage regulatory requirements more effectively.
Trend 05: Banks embrace design thinking
Banks are conducting workshops to gain first-hand insight into customer needs and expectations and then build digital prototypes around the learnings.
Trend 06: Banks are leveraging AI to create a seamless customer onboarding journey
Banks are enhancing relationships by streamlining services that involve customer interactions thanks to AI.
Trend 07: Collaboration with RegTechs continues to rise
An increase in the number of regulations and the associated cost of compliance is creating traction for RegTech adoption among banks.
Trend 08: Technology innovation is driving banks’ risk-compliance initiatives
Through technological innovations, banks can meet regulatory requirements and subsequently leverage this to gain a competitive advantage and deliver customer-centric solutions.
Trend 09: The Open X ecosystem of the future will require players to work collaboratively
Banks are collaborating with ecosystem players and leveraging shared markets to help them establish pivotal roles within the Open X ecosystem.
Trend 10: Contextual banking empowers banks to provide superior customer experience
Banks are leveraging new-age technologies to offer a contextual banking experience – a concierge-like service in which customers are offered products at the right place and time.