How Technology Will Change the Banking Sector Over the Next Decade
The retail banking industry is undergoing a wave of change. To lead the change, it is essential for retail banking companies to choose the right business strategy. Experts at Infiniti Research have engaged in discussions and surveys with top global banking leaders and several retail banking customers to gauge their opinion on the changing retail banking landscape and gain a better understanding on the upcoming trends in this sector. A fair majority of the prospects who engaged in this discussion agreed that technology is rapidly morphing from an expensive challenge into a potent enabler of better customer experience and effective operations. Despite this, attracting new customers is one of the biggest challenges facing retail banking companies today.
The article below scans the category for retail banking services in its entirety to help companies and customers in the sector to understand and stay abreast of the latest news, innovations, and market developments.
Retail Banking: Recent Innovations and Market Updates 2019
Personalization is the new normal
Personalization is gradually becoming a primary mechanism for retail banking companies to enhance their customer satisfaction as well as to increase their economic value. Customer retention is often seen to be higher at banks that understand customers’ financial needs and interact with them in ways that reflect their preferences. In an era of hyper-personalization and competitive pressure, retail banking customers expect meaningful insight and advice-on-demand from their retail banking partners apart from the speed and convenience of transactions.
More local markets may close for outsiders
Traditionally restricted markets including China, India, and Korea will be joined by others in the case of restricting market share for foreign institutions through local regulation and subtle preferences wherein domestic institutions are more favored. Consequently, the ability of emerging market financial institutions to penetrate markets outside of their home countries will become limited. This can only be avoided in case the regional and bilateral trade agreements concluded over the next five years drives select opportunities for certain institutions where financial services are included in the scope of the agreements.
Branch banking will undergo significant transformation
As technology enables every aspect of online retail banking, reducing the usage of hard cash, traditional branches are slowly losing their importance. Given their high-fixed cost, branches will need to become increasingly productive, or significantly less costly. Several retail banking companies have already begun cutting down on staffing, closing the most unproductive branches, and have started experimenting with new branch concepts. These trends are expected to accelerate as customer demands and expectations evolve. However, we do not expect branches to face a full shutdown, rather they may continue to function as centers for flagship information, advisory and engagement hubs, and provide smart kiosks that offer service, sales, cash, and video contact with a range of specialists. The branch size and costs will be reduced by introducing new models and migrating transactions to low-touch digital channels. Although the human touch will always be available, digital channels are expected to dominate the future of retail banking sector.
Cybersecurity will be paramount
Recent cases of high-profile data breaches have generated fear and uncertainty among retail banking customers, prompting retail banking companies to undertake strict measures to curb such incidents. As the regulation over cybersecurity is rising, banking companies will need to do more in terms of intervening and keep pace with the constantly growing and changing cyber threats. It is expected that by 2020 leading banks will have developed advanced cyber-security strategies that are more aligned with their business aims, risk-management protocols, and regulatory requirements. Since many banks lack the capabilities and resources to tackle these issues on their own, such companies will partner with third parties to leverage such strategies.
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The financial services industry is, undoubtedly, evolving rapidly all around the globe. But whether you think about regulations, shifts in technology, or global events, the changes can be dizzying. From the smallest community institutions to the largest multinational firms, it’s time to rework on plans for everyone because what has led to success until now may not work as well in the future. With the Brexit deadline fast approaching, the financial services industry is expected to face mounting risks from potential asset-price bubbles. Moreover, for both small and large financial firms, it is time to focus on scenario planning as 2019 can be a volatile year. Today, with the rapidly changing technologies and financial services industry trends, companies must be adept at becoming agile and boost visibility in the marketplace. In this article, we have talked about some of the major financial industry trends that companies must follow to stay vigilant and make the most of opportunities that arise in 2019.
The future of banking will be considerably different from what we see now. Today, fintech firms are capturing more of the retail banking’s value chain, providing services such as payments, checking, and even savings accounts that could erode the traditional bank’s revenues to a large extent in the foreseeable future. This is prompting several retail banking companies to contemplate over the options to step-up their services and move to platforms that gives a “more digital” experience to the customers. Customer behaviors and expectations are quickly shifting to more personalized and instantaneous services that are provided preferably on their mobile devices. Modern retail banking customers don’t prefer to eliminate processes such as having to go to branches to get a banking-related work done. Rather, they want financial information and the ability to transact at their fingertips. Let’s take a look at some of the top trends that will revolutionize the future of banking.
Future of banking
Advanced ATMs are one of the largest tech trends in retail banking that has revolutionized the whole banking system since their inception in 1967. The future of banking is expected to witness contactless payments in ATMs. Customers will be able to conduct contactless ATM transactions using a smartphone. Several innovations in this space have already been implemented; for instance, the iris recognition used at Qatar National Bank ATMs and biometric authentication has already been implemented in many ATMs in India. These technologies enhance retail banking security and prevent hacking and such illegal practices.
Wearables in banking
Wearable technology is all poised to go mainstream in the future of banking. Smart watches could be used in retail banking to push personal greetings to customers through Bluetooth beacons when they enter a bank’s location. Smart-glasses for bank tellers is also an innovation that is being considered for implementation. This can be used to process customer banking information for the employee as the employee is simultaneously doing other customer service tasks.
Use of extended reality
Extended reality refers to all real-and-virtual combined environments and interactions of human-machines that are generated by computer technology or wearables. This includes augmented reality (AR), virtual reality(VR), and mixed reality (MR). Using these technologies could help create more meaningful customer engagements and also enhanced workforce performance. For instance, South Korea’s Hana Bank is delivering mobile mortgages to customers via augmented-reality applications on their phone. Such practices build immersive and engaging experiences for customers, also making banking less of a chore in the minds of customers.
In-store style experience
Imagine entering into a bank and getting the feel of being inside an Apple store. That’s exactly what the future of banking will look like. It is now possible to easily transact through banking apps or locate the nearest ATMs. So, the only way retail banking companies can increase their walk-ins, in the long run, is by providing top-notch in-store experiences to customers. There will be more facilities inside banks to direct customers to interact with tech kiosks for some transactions. Reserving person-to-person interaction for answering questions or addressing needs that are unique to the individual consumer is another facility that banks seek to provide its customers in the future.
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