Very few businesses have a long history and the stability experienced by the banking industry. Banks are dependent on their customers’ firm trust, and therefore change usually takes a long time. However, members of the banking sector have realized in recent years that evolution is needed if they want to remain significant in a global economy. The banking sector is letting go of some of its conventional approaches and searching for new and innovative ways to make customers’ lives easier.The latest trends in banking are on the way.
Listed below are some of the latest trends in banking and developments expected within the sector over the next five years.
- Utilizing Fintechs For a Better Customer Experience: By collaborating with fintech, banks may deliver value-add solutions to their customers that fall beyond their areas of expertise, and the demand for such collaboration will continue to increase. By using alternative data sets and improved underwriting models to delivering instant money transfers to customers, banks can boost their services at low cost while increasing speed to market.
- The Rise of Neobanking: Expect to see the growth of direct mobile banks in the next five years. Neobanks now attract millions of customers across the country, indicating a shift in consumer preference from conventional, branch-based physical banking to digital-only solutions convenience.
- Automated and Personalized Customer Experiences: One of the main changes observed with different banking clients is that many of them recognized that they are spending additional resources in carrying out repetitive processes. Banks also realized that automating some of these would help free up human resources to carry out value-added operations, resulting in quicker execution, more efficiencies, and customer experience personalization.
- Blockchain and Decentralized Solutions Replacing Most Banks: Blockchain-based technologies are triggering the most significant shift to the banking industry, which allows for about instant peer-to-peer money transfer. Besides, decentralized finance solutions based on smart contract systems, such as Ethereum, already allow systems to lend without the need for financial institutions. These approaches could dominate financial services within five years.
- Better Regulation: Modern banks will focus on making deposits and investing for beneficial purposes and leaving innovative new fintech and digital companies with other financial services. This decouples risk, liquidity, and “know your customer” and increases the conflict of interest arising from the dual objective of modern banking — the safety of consumer money and financial returns for its shareholders.
- The Democratization of Consumer Finance: Secure, mobile-forward solutions will continue to provide quick, real-time “anywhere, anytime” answers to customer wants and needs. Such AI-fueled systems can handle and leverage the full-stack financial potential of an individual — available liquidity and credit-support capability — from a relational and holistic viewpoint, not the isolated transactional nature of today’s banking.