Digitalization has altered how we see Banking, especially in the last couple of years given the growing need for digital banking platforms in the backdrop of the pandemic. Personalized and digital banking services have saved crucial time for customers and bankers alike, while cutting costs and facilitating a wide array of network transactions, resulting in an overhaul of even everyday operations.
If necessity is the mother of invention, uncertainty has certainly sparked innovation, especially in the banking world, where overcoming the challenges brought on by the pandemic has been the need of the hour. While banks focused on building digital products for their customers over the past two years, keeping the overall customer experience at the heart of all innovative practices has become crucial in the backdrop of a global pandemic. So, here’s a roundup of the top banking trends that will continue to shape banking services in 2022.
- Elevating Customer Experience through Analytics: Since keeping the customer at the center of everything has changed from a need to a norm, proactive customer engagement is key. Advanced analytics tools provide financial institutions with deep insights. Monitoring the customers’ financial health helps banks proactively offer them with assistance with personal financial management and growth. Banks can also leverage analytics to enhance their digital offerings and omnichannel experience. Data analytics platforms and machine learning algorithms help banks gain insights into the large pool of customer data, which banks can then leverage to develop new products, optimize processes, engage their customers and improve the overall Customer Experience.
Recommended read: 9 Trends That Define Customer Experience in Banking in 2021
- Crafting a seamless customer journey: The pandemic has made the need for seamless customer digital journey more prominent, and the rise of digital banking against this backdrop has made vast amounts of data available for banks to capitalize. AI-powered bots help banks handle large volumes of incoming customer service requests, allowing them to access the right information from various sources and provide the solution to specific issues, thereby making the customer journey smoother. To take things a step further, future-facing banks are using AI technologies to make sense of the customer data available with them, segment and contextualize it, uncover patterns and give actionable insights. By leveraging this information, banks can predict customer needs and launch suitable products, or upsell or cross-sell existing products that match their needs.Here’s how Imagyn.ai helps Banks leverage insights to enable customers utilize services better by pre-empting their needs
- Open Banking offers scalability and retention: With non-financial players offering financial services, banks face the risk of being dis-intermediated, losing out on both customers and revenue. Open Banking allows banks to build new products and services in collaboration with third-parties through the effective use of APIs. Banks need to release their data in a secured, standardized form so that it can be shared between authorized parties. By collaborating, and not competing with fintechs, API-led connectivity allows banks to deliver mobile-first experiences in non-bank environments, and capture the market share in developing countries by capitalizing on the point of origination. For instance, banks gain more when they offer instalment options for non-banking services such as instalments for electronic products, resulting in customer retention.
Banks can do this by opening up access to consumer banking, transactions and data both from bank and non-bank partners. For instance, at Aspire, we provide banks with a competitive edge by being driven by data, regulations, technology and customer centricity, increasing exciting opportunities and a boost to revenue by 50%. While the value from Open Banking will generate in retail channels mostly, strategic, and agile partnerships will throw open avenues for prioritizing data ownership, analytics and enhanced security.
- Tech that backs banks against regulatory risks in the marketplace: While marketplace integrations are key to e-commerce, banks are increasingly offering services through marketplace integrations that can be added to your cart and you’re good to go. Banks are moving towards ambient banking by shifting to a marketplace banking model, which means they are open to third-party integrations with high security details and combine all offerings on a single platform. While fintechs are partnering with traditional financial institutions on customer-facing segments, paying attention to back-end processed is also key. New and high-volume regulatory compliance requirements for fintechs is complex and time-bound. While regulatory forces resulted in the modernization of many fintechs, regulatory technology or Regtech is helping financial institutions overcome new and complex regulations, litigation and regulatory remediation, without the need to overhaul existing models.
Read more: A regulatory maintenance solution which helps maintain compliance needs
- Connecting emotionally with customers: With most customers banking from their homes, often in isolation, building strong relationships is key. Customer intelligence platforms driven by Artificial Intelligence are set to change how well banks know their customers. While most decisions in modern banks are data-driven, with stronger machinery available to extract customer intelligence and preempt the customer needs, going beyond basic analytics to predictive analytics will help banks understand more about their customers and roll out features that meet their needs. Predictive analytics, as a subset of data analytics, requires clean data to model, train the model, predict and forecast the outcome. 21% of banking customers today are digitally savvy, and nearly 65% of these digitally savvy customers bank on their mobile phones. This is the data trove that allows the bank to track their customers’ engagement points, and the AI-driven platform helps patternize engagements and provide banks leverage in CX and offer services that match customer needs while providing a convenient banking experience.
- Contactless payments now a must-have: Near-field communication has been around for a couple of decades now. Think access cards in hotels, car keys, metro train cards. But the need for contact-less payments has rapidly accelerated only as a response to the pandemic, with social distancing mandates and health risks being catalysts. Near-Field Communication or NFC is the technology which enables touch-free transactions between two devices. This has resulted in customers, mainly Millennials and Zoomers changing their transaction behavior and opting for no-touch payment methods using NFC-enabled cards, phone apps and wearables. Smart phones with NFC are also the norm, with a projection of 1.6 billion NFC-enabled devices by 2024, according to ABI Research. This means banks have both the opportunity and the need to offer multiple payment options at points of sale across sectors. As the pandemic has opened doors for payments innovation, community banks and credit unions will need to be mindful of generational impact on transaction behavior and embrace a culture of innovation and collaboration through partnerships.
- Going the Neobank way: To thrive in increasingly uncertain times, traditional banks need to adopt solutions that can help grow their customer base exponentially, while increasing engagement and experience for better retention. Going fully digital the neo-bank way can enable your bank to offer speed and flexibility to offer convenient mobile experience over branch-based banks, develop propositions that deliver value for customers and focus on the digitally native and underbanked segment of new age customers. This minimalist approach also offers better control on personal finances by suggesting data-driven investment plans and forex solutions. At the same time, digital solutions facilitate ease of integration with Fintech/banking ecosystems and provide flexibility to onboard new products leveraging peer ecosystems while taking care of compliance needs.
- A Strong Technology partner: With a strong demand for digital technologies, there needs to be adequate skilled manpower to service the ever-increasing needs in the post-pandemic world. Third-party vendors are seeing a bridge in any trust deficits by offering secure solutions tailor-made to the needs of their banking clients. In addition, firms are reskilling their employees to maintain these solutions. According to a report by Everest Group, a high investment by IT service providers in building BFSI-specific solutions and nurturing an engineering talent pool will be key to respond to evolving demands. The comprehensive technological competence brought by partners can help adopt progressive solution approaches and lead to significant improvements in speed, efficiency, and revenue.
- Sustainable banking: Going beyond banking in a bid to integrate Environmental, Social and Governance (ESG) considerations has become an integral part of the future of banking and financial services. Financial institutions are responding to sustainability needs and climate change action by adopting tools, services and platforms that help measure and manage their environmental impact. While it’s virtually impossible to go completely carbon neutral, going digital lets your bank offer customers, for instance, personal finance management tools that lets them choose how to budget based on least carbon emissions. When your bank lets customers connect to climate change combatting efforts, you don’t just gain goodwill and win their trust, you also usher in an era of accountability, more transparency and use your power and influence to create positive change. By incorporating ESG metrics into investments, products and service development, this due diligence is another way to mitigate risks, improve customer perceptions and drive long-term growth.
Banks and fintechs have historically been frontliners when it comes to adopting innovative practices and the pandemic has nudged several small and mid-size institutions to adapt to the changing times by embracing digitization and predictive technology to understand and respond to increasingly demanding customer needs. While faster real-time digital payments, marketplace integrations and an engaged customer will breed loyalty, banks will need to be open to collaboration and even dip their toes into uncharted waters. At Aspire, we help banks like yours be on top of the digital game and unleash your full potential by offering one-stop banking services that are customizable as per needs and regions.
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