Open Banking or FedNow: Where to Start?
September 14, 2023 | 2 min read
The banking industry continues to change and diversify. Once thought of as a stiff, ridged sector with limited movement away from the traditional 9 to 5 structure, today's financial institutions are changing, accomplishing more, and becoming increasingly user-focused. A look at banking trends for 2018 indicates this is a time of excellent growth.
Take a step back – look to the start of 2017. You'll find a banking sector full of investors and bankers sitting on the edge of their seats, hoping that the stock market would continue its long rally. Now that it has, there's hope that things will stabilize and the industry will flourish. It's also time to realign goals to achieve more user-driven improvement in the sector. Many of the banking trends for 2018 will do just that. Here's a closer look at some of the most important changes ahead for the industry.
#1: A User-Centric Business Model Will Replace Sales-Driven Approaches
As consumer choice increases, financial institutions that become more user-focused will thrive in the coming years. Specifically, this means moving away from sales-driven approaches. Clients expect faster information and experiences that are streamlined. To achieve sales growth even with the push-back from a sales approach, banks will need to be able to deliver targeted messages to their customers at the right time.
#2: Fintechs Will Play a Bigger Role
There is occasionally resistance from financial institutions to embrace the technology and tools that newer fintech companies are offering and providing to customers. Yet embracing these tools will become essential. Banks and credit unions do not have to comprehensively convert to a fintech model to achieve success; however, they should look at ways they can collaborate with them, acquire them, or otherwise offer competitive services. Again, this is all about providing better customer service.
#3: Mobile Will Become Absolutely Essential
By 2020, there will be more than 2 billion people using mobile banking on a global scale, according to Juniper Research. That equates to 1 in every 3 adults. Digitalizing services and providing for fast, reliable access to accounts online will dominate 2018. In many ways, mobile banking will also become more secure while there will be continued focus on convenience to the customer.
#4: Connected Payment Experiences Will Grow
Connected payments used to be that far-off, "one day" goal for banks and the financial industry as a whole. That day is here. The number of ways for people to make payments is growing. From digital and mobile to making payments directly on social channels, this will be a significant trend in the year to come. For billers and bankers, this will mean there is a need to facilitate more connected solutions. It also means using services like Apply Pay or Amazon's Alexa to make payments. That will take more connectivity from bankers.
#5: User-Focused Rewards Will Draw New Business
Everyone loves something for free, and those using banking accounts are no different. They want and need rewards, especially to make the decision to switch from one bank to the next. Rewards must be driven from data insight, though. Reward customers based on the types of purchases they make or to encourage them to switch to gain access to better discounts, earnings, or free offerings.
#6: Technology Management Will Grow in Acceptance
It's not possible for many legacy systems to be put aside, but there will be further growth in modernizing with new technologies. Key here will be artificial intelligence, automation, and robotics. The more tasks handled by automated means, the less it costs the bank and the more driven the results can be. Banks will continue to look for way to strike a balance between retaining current methods and embracing new technologies to reduce costs and improve customer experiences.
#7: Workforces Will Become Leaner, with More Automation
The workforce within your bank will also change – and that will mean the use of contractors and freelancers heavily, but also the move towards robotics and automation to reduce costs. They will not replace traditional employees, but will work alongside them to introduce new skills and to aid in digital optimization.
#8: Data-Driven Decisions Will Become Commonplace
With the use of artificial intelligence, it will be possible for banks to gather more information to make automatic and on-point decisions. For example, computer systems will analyze legal documents, gather important information, and analyze that data for key decision-making details. These data-driven decisions will be used to create hyper-personalized offers, resulting in deals that end users actually want.
#9: Banks Will Focus on Growth, Not Just Cost-Cutting
Another key factor will be the movement away from a strong cutting-costs business model. Rather, banks and credit unions, armed with new opportunities from growth through improving rates and economic factors, will invest in users and internal solutions.
One example might be a premium banking service, as explored in "Tomorrow's World: A Look at the Future of Banking." This piece explores in detail exactly how banks and credit unions can offer such a model to drive revenue in completely new ways by forming new collaborations with retail partners.
#10: Blockchain Will Become a Force for Banks to Leverage
The end of 2017 brought a Bitcoin explosion, and while that particular currency may or may not Blockchain will become more important in the coming year, though its implementation will take some time as federal regulations are worked out. However, this will become a force in 2018 and onward.
Most importantly, banks will become more modern, and that will bring with it opportunities to meet the needs of millennials and future generations. Blockchain represents the speed and security of the future.
Above all, 2018 will be the year that many of the technologies that have previously been in an infancy stage will mature and become commonplace. From mobile to blockchain, technology will increasingly be synonymous with banking. It might seem strange to say this, but it's an exciting time for banking.
September 14, 2023 | 2 min read
August 31, 2023 | 2 min read
July 28, 2023 | 1 min read