As technology evolves, the banking industry changes forever. Mobile transfers, e-bill payments, and online deposits are already the norm. The increased demand for digital banking services has caused a wide adoption of many revolutionary technologies, such as artificial intelligence and machine learning. As the industry changes, it becomes especially important to keep up with the latest trends so that you won’t lag behind your competitors.
Digital Banking: What It Is?
Digital banking is a term that refers to high levels of digitalization of different banking processes, from front-end to back-end. Artificial intelligence enables digital banks to automate numerous tasks associated with processing data, as well as administrative tasks. As a result, employees face less pressure in dealing with repetitive and time-consuming tasks.
The main advantage of digital banks is that they allow users to make deposits remotely. Besides, digital banking allows for personalization of money management services and enables users to easily apply for loans. There are many tech-oriented startups that offer online banking. However, traditional banking institutions also don’t lag behind and offer various online services, such as account transfers and bill payment.
Online banking preceded the next step in the evolution of banks — mobile banking. Mobile banking is even more convenient, as users can do all the necessary operations on their smartphones. Today, legacy banks realize that online services are a necessity, while digital-only banks don’t need any physical location to provide customer support. Millennials and Generation Z want to be able to make transfers and manage their accounts from anywhere, at any time. Therefore, digital banking will continue to evolve.
Main Trends in Digital Banking
- Data utilization
Data insights enable banks to better understand the needs and preferences of their customers. Now banks don’t need to limit themselves to simple risk-based, demographic, and product ownership profiles. They can access psychographic and lifestyle data, purchase data, geo-location data, and insights on channel preferences and social media use. Advanced analytics allows banks to use data insights to determine not only purchase preferences but also the expected timing of need.
Data insights also allow companies to personalize communication with their audience. Obviously, the personalized approach can increase the effectiveness of marketing efforts significantly. However, personalization requires you to not only know your customers but also to speak their language. Therefore, international banking systems can also benefit from professional localization services like The Word Point.
Effective strategic partnerships have never been so valuable. Given that the banking industry changes at a rapid pace, it becomes very difficult for any organization to work on improvement alone. Building partnerships, banks can extend their platforms and products into new markets, speak to new customer segments, and expand.
The most important thing about partnerships is flexibility. To adjust to changes in the market, companies need to collaborate without renegotiating their relationships. Collaboration allows for seamless integration with the already existing products and systems. Partnering with each other, solution providers can ensure effective integration with credit unions and banks, minimizing the external and internal friction.
For example, JP Morgan Chase partners with Roostify to provide digital mortgage services and collaborates with online lender OnDeck to provide small businesses with quick loans.
- Platform economy
A platform is a new business model that follows the plug-and-play principle. On a platform, multiple consumers and producers can connect, interact, and exchange value. The retail industry has the biggest number of platforms (50), and the financial services industry has 26 organizations with platforms.
Platforms offer services and products from different companies, aiming to satisfy the needs of a wide range of consumers. Unfortunately, many financial institutions are still not ready to offer effective platform solutions, which can be a big problem in the future.
The thing is that platforms can help organizations access huge volumes of data and take their personalization efforts to the next level. In addition, access to this data can improve the overall efficiency of financial companies. However, many organizations are not ready to adopt cloud solutions. Besides, data sharing introduces numerous challenges associated with security.
- Financial health
Financial health becomes the main priority for banks. During the last 70 years, the main competitive advantages in this industry had been the price, convenience, and location. Modern consumers prefer to make well-informed decisions, and their main goal is to improve their overall financial health. As a result, banks that help their clients improve their financial performance win the competition.
According to statistics, about 30% of American and European households note that they don’t have enough money for retirement or have no savings at all. Perhaps, one of the main reasons for such statistics is that people spend more time planning their holidays than their finances. Therefore, they want banks to help them. The popularity of automated wealth managers continues to grow. These apps use artificial intelligence to calculate the best interest rates, loan providers, and investment opportunities.
Digital banking is not a new thing anymore. The financial industry has once again changed because of the development of technologies and new standards of customer service. Modern people want flexibility so they are looking for a chance to manage their finances and to make transactions with no need to visit a bank.
Many traditional banks have already introduced their mobile applications or online banking services. At the same time, fully digital financial services appear here and there, making digital banking mainstream. We hope that our list of the latest trends in digital banking will help your organization set the right priorities, providing the best customer experience possible.