The speed of evolution in customer behavior combined with the emergence of fierce competition and technology leads to a new future for the banking world. This newness’ name is Fintech and is taking the financial sphere by storm. Banks and credit unions are trying to catch up with technology while consumer expectations are increasing exponentially. Thus, the imminent change will provide both opportunities and challenges for various financial institutions. Making the banking business even more difficult, fintech companies are developing solutions that rival even the most innovative banking innovations.
These new competitors threaten the legacy of big financial institutions. Moreover, failing to respond could lead to the failure of a lot of companies. But let us not be so grim! The good news is that many of the new technologies that are threatening the banking industry also present significant opportunities. Those organizations that can deal with big data, analytics, and new technologies can build trust, loyalty, and revenues.
Let us look at some trends that will disrupt our financial vision.
The four most transformational challenges and opportunities for the future of banking through the next few years include:
Response to customer needs
Financial institutions need to shift from physical interactions to digital engagement. Banks and credit unions should count on digitized customer journeys because people demand this interaction. In the past, a good customer service team was vital for any company involved in finance. Anything that required the handling of money or financial matters called for trained staff that is able to help and provide assistance to people. Now the reality combines a good developers team and online help providers.
Optimization of costs
Due to the efficiency of digital-only, banks will need to consider divesting from non-core operations and concentrating more on AI. Besides, online services are really easy on the pocket, but also predominantly time-saving. An operation with a bank employee takes much more time and effort than an already tested online platform. Saving this time will lead to more attention to other potential customers.
Creation of new revenue streams
Open banking and the use of APIs will open new opportunities for revenue growth, too. The banking ecosystem expands beyond traditional banking services. Hence, new products and segments will provide differentiated offerings to the end-user. Plus, banks now own not only one platform for their services, in this way they target various types of customers.
Development of security systems
Customer data is becoming a ‘product’ for many financial institutions. This leads to the need for enhanced security that will become a customer trust luring element. The nature of the new cyber risk is unique, so typical approaches to risk management may not be appropriate enough. An increasing amount of analytics, real-time monitoring, AI, and others are tools to detect potential threats.
In short, Fintech is here to stay and transform our financial activities. It is high time everybody realized what this is promising for our future. Moreover, financial businesses should heavily count on being technology-friendly. The global Covid-19 crisis is also demanding more online services and the banking sector is no stranger to this! We can only wait and see what the next few years will offer us namely in the financial sector.