2020 was a transforming year as a global humankind crisis completely disrupted our world and caused a lot of hustle and turmoil in every industry. It has an immense impact on all spheres of our lives and the current world is still facing many challenges.
Businesses had to quickly adapt to the drastic changes and ripple effects of the ongoing pandemic situation. Many sectors, banking and fintech, in particular, have been completely reshaped as a response to abrupt financial fallout and continuous lockdown.
Pandemic accelerated digital transformations in banking and fintech to effectively adapt to current times, scale-up technologies as well as adjust operations for better efficiency.
The banking field has met not just steep challenges but also numerous growth opportunities.
Over the past months, the unprecedented rising demand for contactless financial transactions related to social distancing and the use of fintech apps urged companies to develop modern solutions, IT infrastructures, quickly update their systems to meet users’ expectations and needs, and ensure impeccable experience.
So how do companies respond to such complications along with augmented demand for their services? Let’s find out right now what trends should the banking and fintech sectors pick up to rise to the occasion and what to expect in the nearest future.
Digital-Only Banks Come Forward
This is one of the latest banking trends that will even keep picking up the pace. The pandemic forced brick-and-mortar banks to reduce their working hours or temporarily close branches until everything settles down.
More and more banks provide their services without having a physical branch. The only thing clients need to do is to use their preferred device to open a bank account and use their finances.
This is a cost- and time-saving solution for both banks and clients and the competition already started extending.
Such an approach grants uncomparable flexibility and, what’s even most important for clients, digital-only banks offer their services at lower rates as there is no need to maintain a brick-and-mortar branch so this is a real threat to traditional banks.
Online and Mobile Banking Experience
Online and mobile banking experience is already common as it’s extremely convenient for most people. In fact, in spring 2020 many banks experienced a 200% rise in mobile app registrations.
Respectively, it resulted in a declined number of physical branch visits as self-service automation enables clients to perform many actions on their own.
However, it’s worth noting that, at the same time, the demand for an expanded range of mobile banking features is growing exponentially.
Users are expecting to completely substitute their cards with an app and use it when withdrawing cash in ATMs, put a temporary hold on a card, use facial recognition or scan fingerprints when entering the app, view spending statistics, cancel service subscription payments, etc.
It’s crucial to understand and satisfy these needs for retaining the existing clients and attracting new ones.
Open Banking Gains Traction
Such an increased interest in online and mobile banking has contributed to the advent of new financial innovation called Open Banking.
A growing number of countries worldwide are planning to implement Open Banking initiatives and leverage the enormous potential of APIs. This is a perfect way to achieve a connected holistic banking experience for clients.
Basically, this technology will enable clients to easily consolidate and access their financial data from multiple institutions and organizations through open API’s for a seamless and impeccable experience.
The adoption of this technology will lead to Open Finance that makes it possible for third-party providers to access client’s financial data after their consent.
Contactless Payment Methods Over Cash
The latest crisis has significantly impacted people’s lifestyles and has formed new behavior patterns. With the reduction of real-life interactions, people opt for online transactions and digital payment methods.
Some countries even expect the complete abolishment of cash and switching to solely digital financial transactions. In its turn, such a transition of banks to a cashless society will reduce costs related to handling hard money.
It will be much easier for banks to analyze digital transactions and get an overview of clients’ expenditure patterns.
Artificial Intelligence for Increased Personalization
Artificial intelligence is being implemented in many industries and the banking sector will broadly utilize this game-changer to increase client’s personalization and overall service use convenience.
AI and machine learning will be actively used to provide clients with real-time tailored financial recommendations to ensure a smooth experience.
In addition, this innovative technology will help banks to predict clients’ behavior, perform risk management, reduce fraud, identify industry trends, and analyze the competition.
Shift to Composable Architecture
Many banks are predicted to switch to composable architecture to let them effectively respond to potential challenges and crises in the future.
The transition can be done step-by-step and it is a perfect agile and scalable solution for financial organizations that will help optimize many internal processes.
This is why broad investment in the transition to composable architecture is a trend for the future year.
More Complex Cloud Environment
From now on, banks and financial organizations are starting to create more complex cloud environment and actively benefit from the enormous potential of cloud computing technologies for efficient remote operations.
Such organizations have to process a huge amount of data on a daily basis and making the information easily accessible will be possible only with the increased use of cloud computing.
This solution is very scalable and cost-efficient and most financial institutions are predicted to embrace this innovation in their favor.
Robotic Process Automation for Higher Efficiency
Robotic Process Automation or simple RPA is another hot trend that banks will try to adopt for increased productivity and efficiency.
This solution can significantly save the budget and substitute or assist human employees with a wide range of tasks to minimize error, maximize accuracy, and significantly improve clients’ experience.
Companies of all sizes invest to leverage this amazing solution that soon will rock the world of banking.
Focus on Cybersecurity
Taking into account that most transactions and financial operations are processed online, companies will pay extra attention to their cybersecurity to protect all the sensitive data and ensure the highest security level of clients’ financial information.
Such data is an easy target for hackers so to avoid financial loss and reputational damage, cybersecurity has to be a top priority for all industry players.
Summing It Up
As the situation with coronavirus spreading remains uncertain and the crisis continues, no one knows exactly when the dust is going to settle.
Companies might still encounter new challenges, opportunities, and discoveries so it’s mandatory to keep a close eye on the situation, monitor the market, and focus on customers’ behavior to quickly adapt to arising circumstances.
Don’t miss a chance to get in touch with our specialists and discuss potential opportunities that will help you implement the latest technologies and software development solutions to take operations to the next level and keep up with the industry trends.