Digitization(1) has transformed industries in the way that they operate and interact with consumers. In the past, businesses provided products and services through brick and mortar structures that consumers had to physically be present in for their wants and needs to be met. The banking industry has not been exempted from the effects of digitization. Online and mobile-friendly solutions have been essential in the modern banking process.
Understanding the Future of Banking
Writing checks, depositing money orders, and standing in line to ask a bank teller to transfer money from your checking account to savings might seem like strange rituals to young bankers under a certain age. However, these practices were once mandatory for account access and moving money from one place to another. With the rise of digital channels and platforms, old-school banks like Bank of America and Chase have had to make substantial adjustments in order to remain relevant in the industry.
(Also Read: What Is Digital Banking)
15 Latest Digital Banking Trends
Banks Adopt “As-a-Service” Platform
Frequently on this website the term “software-as-a-service” (SaaS) has been discussed to describe digital platforms that serves businesses so they can better serve their customers. In a similar scenario, banks are adopting “banking-as-a-service” (BaaS) digital platforms to enhance their financial services to better serve their customers in an increasingly mobile dominated market.
Corporations Request Paperless Remittances
Unlike the financial industry, some businesses have been slow to come around when it comes to adapting to the growing digital environment. In the B2B sector, touch and go, providing payments in real time, access to digital currencies like crypto are the top abilities needed to remain relevant to their consumer bases. When banks provide these services, they too stay competitive in the industry.
From Big Techs to Big Banks
Large and established companies like Bank of America, Wells Fargo, and Chase will no longer be the only players within the banking arena. Big tech companies like Google, Amazon, and Uber are currently trying make their mark in the financial industry, with Google planning to start a “smart” checking account this year. In the current digital environment, big banks must carefully decide who to form potential partnerships with and who might be future competitors.
Digitized Associations Attract Digitized Illegal Activity
Money attracts crime. When currencies become digitized, so does the illegal activity surrounding it. Banks must utilize cybersecurity for their BaaS and other digital platforms to prevent attacks from hackers whose goal is to steal financial information. This means that financial institutions are constantly on the lookout for weak spots and open locations within their digital platforms to keep customer data and financial information safe.
Going Digital to Ensure Better Access to Finances
With 2.5 billion people only conducting cash transactions, from the findings of the World Bank, they are more likely to experience attacks from hackers and may find it more difficult to save and manage money. Going cashless thanks to digital banking services allows for more customers to have access to credit and safer payments options.
Digital Ledgers Become the Wave in 2020
The proper term for an easily accessible, digital ledger is a blockchain. Blockchains serve to monitor online transactions in order to watch suspicious activity, keep customer financial activity on record, and to enhance services offered by banks on their digital platforms. Overall, blockchains help banks to create revenue by making their digital platforms an efficient way to bank.
IoT in 2020: Streamlined Banking for All Devices
IoT (internet of things) is a term that describes the interconnection between devices like smartphones, smart watches, computers (desktop & laptop), etc. Banks with digital platforms interested in attaining and retaining their customers are taking advantage of IoT by making sure their BaaS are compatible with various devices. This includes alerting customers when their account has been accessed by an unfamiliar device or having the ability to monitor activity from anywhere at any time.
Push your Team to Prioritize User-Centricity
To ensure that a bank’s digital platform is a performing at a level, a financial business will often hire a UX (user experience) designer to make sure that their BaaS platform is usable and functionable for their consumers. But it is not enough to just have one, two, or even a whole team of UX designers. Every single member of the business team, from a UX designer to the CEO, must emphasize the user and that their needs are met completely though the use of their services.
Update Design from “Product” to “Language”
When creating a digital platform, the “look” of the interface is definitely high on the list of things to consider when catering to users. But another aspect of creating a digital platform that is meant provide services to the general public is the way that the platform is perceived by its users. Does the platform provide answers that are easily found through steps taken from tools on the interface? Does the platform that was created through the collaboration of designers effectively execute the main goal of serving the user?
Is Marketing Needed if the Service Sells Itself?
By ensuring that a bank’s BaaS digital platform is not just a good-looking interface and actually meets the needs of the customers that uses said platform, the service will sell itself. Big marketing budgets can be a hindrance if the services that are supposedly catered to the everyday user does not live up to the hype. The most important question is not how do we reach as many people as possible, but does the service actually work to serve its user base?
Great Functionality is No Longer a Safety Net
Making sure that a BaaS digital platform works effectively is no longer enough in the growingly competitive market of digital banking. A financial business has to offer something that makes them stand out to consumers to keeping them coming back to your product. By providing benefits and a one-of-a-kind experience to a BaaS digital platform that is customized around the needs of the user, success is sure to be guaranteed.
Smart Tools Help Relationship Managers get Smarter
With the assistance of technological tools like AI-enhanced decision assistance, relationship managers can have better insight on things like industry expertise, a client’s emotional needs, price negotiations, and communication with consumers. Relationship managers have always had these skills, but with smart tools their jobs become a lot easier.
Artificial intelligence can not only assist in making better business decisions, it can also improve the user safety within BaaS digital platforms. AI technology can monitor and learn user behavior within a digital platform to better recognize and alert users when their accounts have been accessed by both the user and more importantly hackers. As criminals get smarter, means of security must be elevated in order to keep digital banking safe and secure.
Everyone knows that digital banking was created to cater to the younger generation of up and coming users. But older generations still overwhelmingly use brick and mortar banking services and might not be fond of using BaaS digital platforms. To bridge the generational gap, many BaaS offer voice-locked, voice-assisted services that allows users to navigate the platform using only their voice. This provides an opportunity for users that do not have a lot of interactions with digital platforms to learn about other banking service options.
Chatbot User Service
When one goes to a new website about a service, you might see on the lower right-hand corner of the screen that a textbox pops up and asks “Wanna Chat?”. Chatbot user service is an AI based technology that answers user questions about a BaaS platform. As stated earlier, AI based technology is constantly learning, so the more users interact with the chatbot user service, the better it performs.
As bank users get younger and younger, the banking industry has had to created digital platforms to adapt and fuller cater to their needs. The digital banking trends listed above provide insight into the current state of modern banking and what the future possible holds for the banking industry as a whole. A person can transfer money form one account to another, deposit written checks with the snap of a photo, and get updates on past and recent purchase with the touch of a button or a tap of a screen.
New contenders within the industry like Google, have kept the old guards like Bank of America and Chase on their toes to create services for users that is functionable, convenient, and adaptable to consumer needs. Success is not longer on legacy or the brand. The priority is the needs of the consumer and if a service can meet, and even exceed, their expectations. Those users also include older customers who might not be familiar with BaaS digital platforms.
The creation of assistance tools helps older banking customers convert from using brick and mortar services to more digital friendly platforms that provide those same service without having to leave the house; which is a crucial function during the Covid-19 pandemic.
Kierra Benson is an alumnus of the University of North Texas at Dallas with a Bachelor’s degree in Communication and Technology. She previously completed an internship at a local newspaper and worked as a content creator for a small online business. Her goal is to work in the media industry in writing/editing and advertising. She has always been fascinated by how messages are marketed in the media to influence the masses and sell products. Connect with her on LinkedIn.