The banking industry is among those that were slower to make the transition to digital.
However, banks have not entirely ignored new digital technologies. Many of them began to use digital technology a long time ago, but a lot of the steps taken toward digital transformation were insignificant.
This article provides an overview of Top 10 digital banking trends and shares tips on how finance and banking companies can jump fast on the digital transformation bandwagon and gain a strong competitive advantage.
More often than not, banks flirted with digital technology without transforming completely. While there is significant pressure on banks to embrace digital trends and get future-ready, three reasons stand out over the rest:
The competition, changing consumer behaviors, and the effects of COVID-19 on banking do not have to be seen as major existential threats. They are just the push that specific industries like banking need to change their ways and become future-ready. For the banking industry, being future-ready means having eyes on today’s most significant digital banking trends.
The days of walking into a bank and standing in line to meet a teller may soon be over for good. So are the days of being on hold for endless hours, waiting to be connected to a customer service representative. Customers expect services to be faster and easier. As other industries and services become highly digitized, customers expect the same from banking.
Financial institutions need to realize that a significant portion of their customer base might choose a competitor that offers the convenience of digital channels. This is true even if that competitor’s legacy, reputation, or list of services may be lacking in other aspects. With the direction that online banking is headed, there may not even be physical banks in the future.
With increasing digital services in their lives, customers are getting used to higher speed, safety, and convenience levels. Customers also expect a certain level of personalized assistance with their services. Modern analytics allow institutions to understand every aspect of their customer’s interactions with them. This approach helps them mold and deliver more personalized customer experiences.
If banks can successfully customize their customers’ experiences and prioritize personalized service, they will likely see higher customer satisfaction and retention rates. Moreover, this proves that the move to digital is not all front-end decoration and modernization. Back-end digital tools like analytics are equally, if not more, important.
It is more than likely that you have encountered chatbots and virtual assistants on apps and websites. They are widely used, and their quality and accuracy are constantly improving with more robust and advanced artificial intelligence (AI) technology. As this technology advances, so does the speed of customer service.
Chatbots and virtual assistants are now able to guide customers with just a few prompts. These days, it is not uncommon to see matters being resolved without a customer needing to speak to an actual human representative. If banks have not already started to develop and prioritize modern advances in AI technology such as this, it is time to do so.
Smartphone applications have changed the way we live. This change has happened so rapidly that it is difficult to imagine what life was like before. As useful as they are now, banking apps are likely to transform into one of the most important tools in your pocket. Every time you interact with your banking app, it learns something about you and your financial habits.
By noticing trends in your recurring transactions like rent and monthly bills, banking apps will become personal assistants. They will soon offer increased accuracy in services like payment reminders, routing money, and autopay options, and that’s just to name a few.
We have established that digital transformation is both inevitable and necessary for the banking industry. But digital transformation is no cakewalk. It requires a holistic understanding of customers, their behavior, and how they interact with services. That is why data has become one of the most valuable assets in the world.
Data and analytics are essentially an encyclopedia about customers. This applies to most industries, but banks are definitely beneficiaries. Banks’ volume and quality of data on their customers will most likely define how successful their digital transformation will be. The more accurate data they have, the likelier it is for a bank to acquire and retain customers.
As the name suggests, Open Banking API is when banks open their Application Programming Interface (API) to third-party providers. These third parties are often financial technology companies. Examples of services they may offer could include apps or software for online payments, debt management, BNPL (Buy Now, Pay Later), insurance sales, and tax preparation.
While the idea of banks opening up their customers’ information to third-party providers might sound risky, Open Banking API has shown promise. It is pretty clearly a major and logical step toward complete digital transformation. To do this, banks need to guarantee the safety of their customers’ data through strong protective measures and only share information with consent.
Banking is a sector where customers are increasingly looking for self-service options. While dominant logic might suggest that customers want all their work to be done for them, banking customers are making it clear that they want to do things by themselves. This poses an interesting challenge for banks across the planet.
A successful digital transformation should provide customers with the technology and tools to feel a certain level of confidence and independence with their banking. Banks need to develop the right self-service tools and strike a balance between helping customers in a personal way and making sure they do not feel claustrophobic.
Many organizations within the financial services sector have pivoted to digital. A lot of these new (or newly) digital services aim to cut out intermediaries and centralized institutions like banks. With this new breed of competition snapping at the heels of banks, inaction would be the biggest mistake.
Everyone understands that the profound transformation of any business model brings with it a new set of challenges. For banks, competition from emerging FinTechs encroaches upon their customer base. One way to navigate this new competitive landscape is by partnering with financial technology companies and transforming themselves into contemporary digital institutions.
Rather than being fossilized by new digital service providers and fintech startups, banks must be firmly convinced that innovation and digital technology are the only way forward.
Banking is an industry that needs to evolve quickly. That is why no-code and low-code software development platforms are trending. For obvious reasons, no-code and low-code development platforms are faster and can be done by teams without a ton of coding experience or expertise.
Banks do not have the luxury of time when it comes to digital initiatives. They need to move fast because customer expectations are constantly increasing and evolving. Even worse, their competition is working overtime to acquire them.
No-code and low-code development platforms allow banks to launch digital products and services with lower costs and higher efficiency. In addition to developing their own products on no-code and low-code platforms, there are numerous third-party products that banks can safely and easily integrate into their systems.
Blockchain is a word we hear everyone talking about. It is undeniable that organizations across industries are getting more and more curious about blockchain technology. The complete potential of blockchain technology still remains abstract. That potential also may be unrealized for many years, but it is understandable that centralized institutions like banks feel unsettled.
Even though blockchain technology will keep growing, banks need to shift their mindset towards coexistence and collaboration rather than conflict. It can be easy to be swayed by narratives that leave no room for nuance. But the true possibility is that decentralized and centralized finance could cross paths and figure into each other’s systems to some degree.
Only time can tell how this coexistence of blockchain-based decentralized finance and centralized institutions like banks might manifest and play out. The important thing for banks to do during a digital transformation is to be open to all possibilities for the future.
A digital transformation that challenges every aspect of what has traditionally worked for an organization can be a daunting idea. However, banking simply needs to be done because banks that do not evolve will struggle to keep up with the competition in an ever-changing landscape.
What we at rinf.tech achieved for a client who is a global leader in banking and fintech is a success story that proves that profound transformation can be achieved in a short time.
As such, this success story highlights the fact that it is important to align with digital banking trends like the ones listed above. Modernizing legacy software, applications, and architecture is the first step banks need to take to continue on the digital path and be future-ready.
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