The Future of Banking – Exciting Times Ahead:
In a world of ever-changing technology, new trends in the financial sector are changing the industry. We see these changes that will put the customer at the heart of banking in the future. Here we examine the views of Forrester and others who made their predictions for the next decade as a retail bank.
Technology has become the greatest advancement, with smart devices and programs offering banking experience and even collaborative programs offering loans. In the future, customer expectations will change, there will be emerging technologies and new business models, and banks need to prepare for the banking sector in the coming decade with new strategies.
It became clear that banks must leverage emerging technologies to succeed, leverage evolving business models, and put their customers at the heart of any strategy.
Over the past decade, we have seen smartphone banking apps that allow people to manage their finances anytime, anywhere. In the next decade, new technologies will provide hyper-personalized services.
Let’s take a look at some directions for the future of the banking industry.
• With digital ID profiles, customers have more control over their personal information. However, banks have difficulty managing, developing, securing, and accessing these digital IDs through third-party services outside of financial services, such as utilities and merchants. A survey by the Boston Consulting Group shows that banks are already equipped for this, as 80% of people rely on banks to securely manage their data, compared to 5% who rely on technology companies.
• As AI masters new data sources and analytics technologies, banks better understand customer needs and create new revenue streams. Over the next ten years, this could lead to frictionless banking for customers.
• The integration of new technologies, such as augmented reality and voice activation, into mobile banking will be revolutionary with all financial information available in local services and tax information, in a single telephone banking application.
• Much of the future of the banking customer experience lies in the development of technologies that are currently underused in the financial world, such as 5G. This can significantly increase the volume and speed of data processing and increase data-based modeling in the banking industry. Quantum computing, with its shift from theory to reality, could bring great benefits in the future.
According to Forrester, by 2030, banks will be invisible, engaged, informative, and proactive.
1. Invisible. The technology will be used by major banks, along with customer information, to provide financial services to customers when they need them to make the brand visible. Deployment models are designed to leverage markets and technologies, such as open APIs and 5G, to link financing to homes, cars, vehicles, and other devices. This is becoming a challenge for many banks as their brands become increasingly invisible to the end consumer.
2. Connected. The only way for banks to stay relevant is to be present in the ecosystems and products that customers use. This can happen when banks accept partnerships and accept their brand marketing. Create value constellations that work with familiar environments where non-bank employees can add value to the rich and easy customer journey. The ‘Trusted Advisor’ status distinguishes banks from all other touchpoints that provide integrated financial services.
3. Based on perceptions. With enormous knowledge of data, banks are building a very valuable asset: more consumer confidence. Due to the large role around consent and identity, customers have limited control over their financial and digital lives. Banks will certainly have to act with sound advice and create financial intimacy with their customers who expect trust in the ‘RoC’ (return on consent).
Objective orientation. In a more focused moment, consumers will choose banks aligned with their environmental and social values, with local and collaborative principles consistent with the themes of global responsibility. Leaders who build value-based ecosystems are distinguished by open cultures that build and manage communities. As a result, open innovation and engagement through code, content, and knowledge will create communities driven by a common goal and drive collective product development for the benefit of all.
Look at the future of the banking sector from three perspectives; bank, customer, and employee, Forrester’s research shows that each will play an important role in shaping the future of the banking industry. Some banks can become the platform and rails on which other companies operate; other larger banks will compete with the tech giants in customer numbers and engagement, and some banks will focus on both. Banks are responsible for customer trust and must carefully choose their main battlefield.
While COVID 19 brings change and innovation, some leading banks are already reversing their strategy and set their course for the next decade.
The horizon looks bright for the future of the banking sector.
• Technology is inventing new ways to protect people and the financial system. Automated programs can perform security checks quickly and accurately, identify criminal activity, fight fraud, and ensure product suitability.
• Artificial intelligence helps formulate the right product recommendations by performing comprehensive and timely quality checks.
• Banks are already investing heavily in technology to ensure data confidentiality and protect customers’ personal information. Banks of the future help their customers to securely prove their identity to other organizations.
Banking is essentially based on trust.
Customers want their money and personal information to be protected. They want banks to help them make the right decisions. Therefore, banks must find the right balance between using technology and data to meet customer expectations, taking into account the risk and protection of the financial system. They must use new technologies, such as artificial intelligence and big data, in an ethical way to ensure that customers are always informed about the use of their information and that their consent is protected.
There is still a lot of standardization work in AI with more coordination to take advantage of unlimited new technologies.
In short, all these developments make this an exciting time for the banking sector. While technology offers the banking industry unprecedented speed and convenience, the banks that will dominate in the future will undoubtedly be those that combine technology with efficient risk management and a great customer experience.