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With the COVID-19 shaking the world, markets were facing disruption and challenges they had not anticipated. In addition to the financial collapse, COVID-19 is reshaping the banking industry in several dimensions, promoting new ways of innovation, ushering in a new competitive landscape, redefining the role of physical branches, and ultimately accelerating digital transformation across every aspect of banking.
Banks have learned valuable lessons during the pandemic. Since there was no existing playbook to follow, banks had to create new ways to adapt and sustain. Technology and digital became the two top priority areas of focus by banks and financial institutions. Doing away with traditional practices, moving from paper-based to digital solutions, shifting to a customer-centric approach is helping banks to fight the growing competition.
Banks are also striving to upskill the existing talent pool to facilitate flexible and dynamic functioning. The end goal of all these changes is to boost efficiency, productivity, creativity, collaboration and offer the highest levels of customer experience. So, what are the crucial shifts in 2021? What are the trends reshaping the banking industry?
Top 5 Trends of Digital Banking in 2021
The year will see a lot more banks switch to a digital-only model. Digital banking is what the customers of today demand, which has proven beneficial to both banks and customers. Doing away with the need to visit a physical branch, spend time waiting in line for assistance, and do tedious paperwork, banks have developed digital solutions which will include more than the regular banking services.
Research has shown that the number of physical visits to banks will drop a good 36% (2017 to 2022) due to the emergence of digital-only banks. Few other benefits of digital banking include faster e-payments, the ability to complete all financial transactions from the comfort of your home, access to bank-related information from anywhere, anytime, real-time analytics and updates, and seamless services.
It translates to optimization of operational costs, increased efficiency, and better customer relationship management.
Incumbents will adopt advanced technologies, such as Artificial Intelligence and Machine Learning to facilitate automation to simplify and streamline processes, reduce costs and increase internal efficiencies.
The world is rapidly evolving, and so is the banking & financial industry. The reduction in face-to-face interactions and the increased use of online services have transformed how people interact, spend their money, and use their time.
Customer expectations have been growing, adding to the pressure faced by businesses. It is not easy to switch from a physical model to a virtual operating model, but many banking operations have been moved online despite a few hurdles. Employees’ productivity levels increased, efficiency levels improved, customer retention went high while adhering to regulations.
Banks have been slowly shifting towards the cloud to create agile businesses, increase data security, and reduce costs. It also enhances accessibility for all parties involved. Banks can accelerate the time taken to launch new products and services to the market while reducing costs.
Bloomberg predicted that financial services companies would spend $500 billion globally on cloud technology by 2021. There will be an increase in partnerships between cloud solution-based companies and financial institutions in 2021.
2020 was the pandemic year, and 2021 would be the year when businesses look towards sustainability as part of their portfolio. Adopting solutions that work in the future, being more environmentally aware are two aspects of this trend.
Banks and financial institutions will look for solutions to equip their employees with the tools and knowledge required to lead sustainable lives. On the other hand, by adopting carbon footprint trackers and other similar kits, banks empower their customers to make better-informed decisions about their money.
In keeping with the safe distancing that COVID-19 brought forth, customers have now shifted towards digital contactless payments and transactions. It has forced businesses to adopt digital payment methods, such as credit card machines, QR codes, UPI, and other payment options. Banks have also made it easy for customers to transfer money to their peers/vendors and others, which has led to reduced costs for the banks while offering improved experiences to the customers.
Digital transformation ensures a high level of data security across operations to assure customers that their money is safe. Customers can use two-factor authentication and the PIN/OTP feature that enables cashless transactions.
Neutrinos Enables Digital Transformation in Banking
Neutrinos is an all-in-one, single-vendor digital experience platform for building interactive design models and user-driven experiences across all channels with best-in-class software and integration capabilities. We offer a range of customer-focused low-code digital banking solutions to forge stronger relationships and grow the business.
Read the blog, “Digital Transformation in Banking – The Four Key Pillars” for more insight on this topic.
Are you looking to make your bank future-ready?