The banking sector’s future will look entirely distinct from what it is today, managed by some evolutionary changes. It would be reliable to say that the future of banking will be ‘Digital.’ Moreover, the pandemic has revamped our lives from how we travel, work, shop to even how we bank and invest. In addition, it has also made a change in consumer practices. Consumers have become more particular about digital actions. The pandemic has only increased the requirement for easy access to banking services, products, and information.
Furthermore, many people nowadays are comfortable using online channels; the enduring customer loyalty for physical proximity of growth would now be affected by personalization and customization offered through the digital offerings. Extensively, the market has been flooded with a new tide of developing neo banks. Dissimilar to traditional banking, these are not hampered by legacy technology and are working with more excellent activity.
Additionally, neo banks can provide personalized experience and seamless communication to seek a generation that needs an intelligent digital experience. Besides, for many conventional banks, security and cost-efficiency are robust motivators for going digital. With an expanding number of practiced banks and FinTechs, competitions for obtaining new customers and retaining existing customers have never been more.
Moreover, the benefit of these traditional banks have over the specialized banks, and FinTechs is that they have a 360- degree contribution in terms of services and products. However, they only need to adjust to the customer-first approach in this ever-changing atmosphere to proceed to lead the space.
Traditional Banks Are Catching Up
There are indications that mainstream banks are becoming more digital-friendly to prepare for the future of banking. Hello bank, by BNP Paribas Fortis, for instance, is the first mobile-focused bank with accounts handled entirely through its app. Furthermore, Hello Bank offers its customers assistance and support through an online forum and various social media services in response to a changing consumer landscape. Plenty of these services also make cross-border banking more accessible than ever before.
Subsequently, the number of apps that help customers maintain their finances daily has increased. For instance, Yolt, lets users add all of their accounts and see them in one app while also receiving budget tips for that week or month. Besides, standalone savings apps are also becoming popular. This involves apps that round up a user’s spending on each transaction to the nearest unit and deposit the difference in a savings account.
In addition, such easy and innovative apps will provide users with the latest, simple way to save money if they can not afford to save hundreds of pounds or euros each month.
One of the long-term consequences of the 2008 financial crisis was increased attention on how banks connect with and provide information to their customers. Also, the Payment Services Directive entered into force in the European Union in 2018. The directive establishes guidelines for how users can access their financial information. This is open banking, which opens up a world of modern options for banks to join with customers and for clients to get a bigger view of their investments.
Primarily, open banking indicates that providers of online accounts, including savings and credit cards, must allow their customers to safely share data such as spending with the third-party providers if the customer desires. There is yet a large way to go to users aware of the advantages of open banking. Additionally, banks should properly adopt the various ways they can use these improvements.
Cryptocurrencies and Blockchain Technology
You must have probably heard of Bitcoin, the most well-known for over a thousand cryptocurrencies. In particular, cryptocurrencies exist online; they can also be converted into traditional forms of currency. Moreover, cryptocurrencies are not a steady investment; their prices fluctuate passionately from day today. However, that doesn’t mean they can never be used for larger purchases.
Apart from this, blockchain technology is the one that supports cryptocurrencies like Bitcoin. Blockchain usually includes a network of computers operating together to validate and process transactions. Its popularity is already growing, and it would be important for the business and consumers in the future.
To conclude, banks must shift their focus away from current accounts and cash machines and towards the future of banking. This further means being a guide to their clients and providing them with a complete personal finance service in one location.