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With the COVID-19 shaking the world, markets were facing disruption and challenges they had not anticipated. As we enter 2021, the market outlook is undergoing a transition, the year when the world is going to pick itself up. The year when banking and other industry leaders are working towards re-emerging.
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 played by 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 that banks and financial institutions focussed on. Doing away with some of the traditional practices, moving from paper based to digital solutions, shifting to a customer-centric approach are some elements that are helping banks stay in the game, and 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 will be the key shifts in 2021? What are the trends reshaping the banking industry?
In this blog post, we will share a few trends to look forward to in 2021, which will reshape the banking industry. Read on to know more
Five trends reshaping the digital banking industry in 2021
#1 Completely Digital
The year will see a lot more banks switch to a digital-only model. Digital banking is what the customers of today demand, something that has proven extremely beneficial to both banks and customers. Doing away with the need to visit a physical branch, spend time waiting in line for assistance, tedious paperwork, banks have developed digital solutions which will include not just the basic services going forward.
Infact, 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, ability to complete all financial transactions from the comfort of your home, access to bank related information from anywhere, any time, real-time analytics and updates, and seamless services. For the bank, this translates to optimisation of operational costs, increase in efficiency and better customer relationship management.
Incumbents will adopt advanced technologies such as Artificial Intelligence and Machine Learning capabilities to facilitate automation to simplify and streamline processes, reduce costs and increase internal efficiencies.
#2 Changing Consumer Behaviours
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 has transformed how people interact, spend their money and use their time. Customer expectations have been growing, adding to the pressure faced by businesses. It was no easy task to switch from physical to complete virtual operating model, but despite a few hiccups many banking operations have been moved online. Employees productivity levels shot up, infact efficiency levels improved, customers were served and retained, and regulations were adhered to.
#3 Cloud appeal increases
Working towards beating competition from both existing and new entrants, incumbents have been slowly but definitely making the shift to using the cloud to create agile businesses, increase data security and reduce cost. This also enhances accessibility for all parties involved. Banks can accelerate the time taken to launch new products and services to the wmarket while reducing the cost. Bloomberg has predicted that financial services companies are expected to spend $500 billion globally on cloud technology by 2021. There is also going to be an increase in partnerships between cloud solution based companies and financial institutions in 2021.
#4 Sustainability in focus
If 2020 was the year of the pandemic, 2021 is going to 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 to 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 tools, banks will empower their customers to make better informed decisions when it comes to their money.
#5 Cash shall soon be dethroned
In keeping with the safe distancing that COVID-19 brought forth, customers have now shifted towards digital contactless payments and transactions. This in turn has forced businesses to adopt digital payment methods – 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, all of which has led to reduced cost for the banks while offering improved experiences to the customers.
Digital transformation has ensured banks and other financial institutions ensure data and high level of security across operations which assure customers their money is safe. Customers are given the option to use two factor authentication, and PIN/OTP features which encourages them to go cashless a lot more.
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 digital banking solutions to forge stronger relationships and grow the business. Reach out to us to understand how your bank can become future ready..