Across the country and around the world, the novel coronavirus pandemic has reshaped assumptions and prompted some swift and significant changes. While the public health implications and short-term economic impacts have made headlines, there are long-term structural changes for many industries that will persist long after the immediate crisis. The banking sector is one space that has already begun to evolve, with new priorities and perspectives from consumers and financial institutions prompting new partnerships, new technologies and new approaches to creating seamless financial “ecosystems.”
Understanding the nature of these changes is the first step in appreciating the contours of the digital banking landscape—not just in the weeks and months ahead, but for many years to come.
One increasingly common phenomenon is the propensity for larger banks to connect with smaller players to expand into new markets. For larger financial institutions, the ability to connect with an established customer base in new markets is obviously appealing. Smaller banks are subsequently able to offer new tools and new resources that they were previously unable to provide to their clientele. The scale and scope of these moves are to some extent, dictated by the nature of the regulatory climate (and is therefore, more common in South American markets than in the U.S., for example). Still, it is noteworthy that one of the results of this trend is at a time when historic pandemic-driven economic pressures are widespread around the world. A wider range of both banks and consumers can now access a more diverse and sophisticated range of financial instruments and banking tools.
New tech tools
From new payment systems to point-of-service innovations, the tech landscape of the financial sector is exploding. The proliferation of digital wallets and no-touch point-of-service platforms comes at exactly the right time for a global population understandably focused on health and hygiene. From small purchases to life-changing loans, digital currencies and virtual tools are making remote payments and banking more accessible than ever. Apps like Venmo, payment systems like Apple Pay and Google Pay and conveniences like digital receipts and mobile check deposits have changed the way many people utilize and even think about currency and payments.
From Europe to South America, some markets have benefitted from introducing a new generation of multifunctional ATMs that offer a number of new tech-driven conveniences. From touchless ATMs to terminals that can process loans and other complex financial transactions, today’s automated tellers have far outpaced their predecessors. Some ATMs now allow users to print physical bank cards at the terminal, further reducing the need to visit the bank itself. In the midst of a pandemic, the value proposition of virtual banking is clear.
Because tech-driven flexibility and efficiency are such a critical piece of the banking puzzle, banks, brands and businesses are becoming much more proactive about establishing professional partnerships with tech companies and larger financial institutions to create fully realized financial “ecosystems.” The resulting connectivity and convenience of digital wallets and other tech conveniences isn’t just appealing to consumers but keeps those consumers inside a proprietary network for all of their banking needs. It also allows retailers to create stand-alone systems, solutions and accounts that enable them to effectively function as a bank.
Beyond the technology itself, the unifying theme behind the tools and tactics described above is streamlined simplicity and integrated utility. Tech-friendly conveniences are an expectation in today’s world, and the tools to make them possible are becoming more accessible—at the very moment demand for them is rising. Unsurprisingly, this trend has also led to a new push for tech companies with experience working in digital banking—specifically those with experience designing and deploying new digital payment systems and other tech-driven banking technology—and the demonstrated ability to connect those innovative new tools to legacy platforms. When executed correctly, this can create elevated integration and seamlessly coordinated functionality that distinguishes the best of these new digital banking ecosystems. At a moment when pandemic pressures have heightened demand for such tools and platforms, the growth of these tech innovations is not just ideal—it is essential.