The banking sector globally is becoming both strategically concentrated and technologically exceptional to respond to consumer expectations while trying to secure market share against an increasing array of competitors. A huge deal of significance is being placed on digitizing core banking processes as well as restructuring organizational structures and internal talent to be better prepared for the future of banking. This transmutation illustrates the increasing desire to become a ‘digital bank.’
The value of innovation and developing new solutions that take advantage of data, digital technologies, advanced analytics, and new delivery platforms has never been more critical. We are seeing organizations innovate in targeting, re-configuring delivery channels, expanding services, delivering proactive advice, integrating payments and applying blockchain technology.
Serving a Segment of One
According to experts, numerous banks have actions directed at targeting demographic-based clusters such as modern generation, Millennials or older people, but a few banks are now targeting consumers based on values, lifestyles, aspirations, mindsets and underserved needs. In 2019, many banking institutions are expected to go beyond personalization by segment, to evolve individualized communication and experiences for the portion of one. This is the ultimate level of innovative customization allowed through advanced analytics, data, and digital technologies. This level of customization includes clustering a customer base with advanced criteria, where human-centric, design-thinking pillars and CRM tools assist banks and credit unions match needs to solutions in real-time.
The increase of Open Banking
With each passing day, regulatory bodies worldwide are requiring banking organizations to enable consumers to share their data securely with the third parties to power new financial services and increase competition in the banking arena. By making an account and payment data available through secure application programming interfaces (APIs), customers have greater freedom and control in how they communicate with their financial service providers. Open banking APIs speed up innovation and collaboration, leading to distended banking ecosystems that could reckon more than financial services to make a customers lifestyle immeasurable.
With the increase in the cost of a traditional branch network and the augmentative number of transactions moving to digital channels, conventional financial services firms are introducing digital-only banking entities. Some banks are entering digital-only banks to collect deposits, while other financial firms are using digital platforms to offer investing, lending, and specialization services. In each situation, the focus is on innovative customer experiences and improved value to the consumer, supported by their data and advanced analytics that can personalize engagement.
The payments industry has been and will proceed to be, one of the most powerful areas of innovation in the banking industry. Influenced by changing consumer expectations and driven by technological advances, innovation will go on to come from traditional financial institutions, big tech players and fintech firms. As the infrastructure of payments continues to develop, change will move the payments industry from a series of specific products to a part of everything customers do. Differentiation will be driven by technology, data, and delivery, transforming the dynamics of how and where we pay and receive payments. Payment innovation trends will happen in conjunction with the point of sale (POS), Internet of Things (IoT), mobile wallets, cryptocurrencies, and the blockchain.