Trends in Retail Banking to Watch Out for
The financial industry is constantly evolving with the help of new technologies and is continuously adjusting the business model to reflect an ecosystem that is more digital and contactless.
2020 was already being called as year of the decade for digital bank transformation even before the Coronavirus Pandemic started. Such changes reflected a mounting hunger for must-have innovations including seamless, hyper-personalized user experiences.
This shift also indicated the real need for more efficient operations as well as increasing the pressure to provide better services with ease, while facing challenges from systems, such as Open Banking (allowing third party applications access to bank accounts) which was disrupting the industry, and splitting the value chain into distribution and manufacturing, and increasing competition from new entrants such as Google, Amazon, Facebook and Apple.
The COVID-19 pandemic accelerated the demands. It has even changed consumers’ behaviors, pushing them to consider new tools and technologies. A March 2020 survey by Lightico found that 82% of customers were concerned about visiting their branch in person and that 63% of those polled were now more willing to try digital applications. These shifts are long-lasting.
In Summary, The banking industry is undergoing fundamental changes driven by advancements in technology, the emergence of the so-called Open X ecosystem, and the entrance of bigtechs into the scene, banks and financial institutes will have to take aggressive steps towards building a strong base consisting of data processes and customer experience. Digitization and Advanced technologies such as AI ML cloud & blockchain will come to the forefront.
Top trends in retail banking to watch out for in 2020 are emerging on the back of the rise of artificial intelligence (AI), machine learning (ML), blockchain and other cutting-edge technologies, as well as changing customer expectations.
In 2020, digital transformation is the norm, and those who do not change their systems and processes will fall quickly behind.
Omnichannel strategy for a 360-degree customer view
Customers across all the industries want seamless experiences. The banking industry is no exception. Making customer experiences seamless would mean making the corresponding customer journeys simpler, smoother, and sustained. This further implies that banks must achieve the highest levels of multichannel delivery outcomes and become truly omnichannel.
Wowing the customer with digital onboarding
Digital customer onboarding makes onboarding fast and seamless and is important to create a lasting experience for Gen X and millennials. Disruptions from fintechs and the isolated COVID-19 pandemic, have forced banks to increase their investments in digital customer onboarding. Early adopters have reaped the benefits, as it ensured business continuity during the pandemic, while reducing operational and regulatory risks.
Key Components of Digital Customer Onboarding being:
Data Extraction from Document Image – OCR
Video Based KYC
Bio Metrics and AI Based Face Match
Digital Signature and Verification
AI Based straight through process
Real time data fetch using API's
Banks were not built to be open and as such legacy platforms are an obstacle to today’s frictionless digital customer experiences. Open-banking adoption can help banks monetize data, develop and cross-sell offerings and gain market share. Banks can also earn commissions from reselling third-party products and services. With the combination of massive customer data and open banking, banks can bundle products and services. They can then create targeted, customer-oriented personalized solutions to cross-sell and upsell.
AI-driven decision making
Nearly 75% of large financial institutions are in the process of implementing AI strategies, according to Business Insider. The benefits of it are expected to be seen this year. Embracing AI in decision-making will result in significant time savings as decisions will be made in real time, especially on retail loans, auto financing and credit cards — areas where the volume of transactions is distinctly high.
While most banks still rely on local server systems, there have been shifts in recent years, with traditional players moving to the cloud to benefit from modern counterparts. In 2020, more banks will be taking advantage of the cloud, and some will make a move to public cloud platforms.
Cloud helps connect the enterprise. Changes in consumer behavior have led to core system upgrades, automation of back- office-linked processes and the elimination of data silos. The cloud helps collect, store and analyze data efficiently. It helps enterprise- wide synchronization by breaking operational and data silos, such as customer support, finance, risk and regulatory compliance, across functions. This leads to integration of business divisions, sharing data and driving combined decisions to help solve customer issues. Banks can monetize their enterprise data through other banks, fintech’s and third-party players in the expanding ecosystem.
Current business trends indicate that banks are creating an ecosystem where collaboration with FinTechs and RegTechs is becoming the norm to cater to a broader customer base.
As FinTech and BigTech players continue to raise the user experience bar, banks will now need to apply design thinking methodology to create a more seamless experience across all customer lifecycle touchpoints.
Next-gen technology is helping banks meet regulatory mandates and create processes – such as unified customer onboarding and boost operational efficiency.
With customer-centricity as a guiding principle, banks in 2020 and beyond will focus on investing and implementing emerging technology to meet changing consumer preferences. A future-ready workforce with digital mindset are crucial for future success. As FinTechs and challenger banks lead the technology race with superior customer engagement, banks will seek collaborative partnerships to bridge the technology gap. Leveraging real-time context, banks can offer customers personalized offers and enhanced experiences before they even realize the need.
Personalization will pave the road to future relevancy.