4 Digital Banking Trends to Watch
Traditional banks are feeling the pressure to keep up; forced to adapt or risk losing customers to digital banking.
There’s no doubt that digital banking is on the rise as millions of consumers and businesses are using their mobiles and apps as a way of life.
Here are 4 trends, we believe will shape digital banking...
1. Banking will no longer be business as usual
Banks will play a vital role in the global economy, but their ‘definition’ and scope will change beyond branches, traditional products, and services.
Banks will move to a customer-centric model that adapt, provide seamless services across all channels, i.e., Omnichannel – engagement inside social media platforms, app, smartphone, and VR or metaverse.
Smartphone vendors or service providers will be perceived as ‘mobile banks’ because they can store funds (e-wallets), transact, save (in return for loyalty points), transfer funds, and pay for goods and services; potentially bypassing banks or complementing them. This is already in motion, and this trend will only increase.
2. Telcos offering financial services
Telecom operators, or telcos are embracing financial services into their business model and only going to continue. Telcos are often the first point of contact as they already have deep relationships with their customers, KYC, usage, the scale, infrastructure, and a large captive audience with high engagement.
One example is M-Pesa, a mobile phone-based money transfer service that allows users to deposit, withdraw, and transfer money using their mobile phones. This service is popular and competes with traditional banks by offering lower fees and more convenience. This presents a massive opportunity for telcos. As a result, we expect, hundreds of telcos getting more inter-twined with financial services.
3. Super apps will become digital banking hubs
Super apps, have become hugely popular all over the world and grown from simple messaging into a ‘digital lifestyle destination’ with over a billion users and an ecosystem of millions of mini programmes. These super apps are likely to become the go-to place for many.
Joining them would be e-commerce and social media platforms, which have captive audiences and will offer e-wallets, money transfers, in-app store purchases and more.
Many of them are offering or piloting fintech services within their walled gardens. Even ride-hailing apps like Uber now offer some fintech and growing their reach and offerings.
4. AI will play a more significant role
Artificial intelligence is already used in digital banking, and its role will only increase in the years ahead. From robo-investing, personalised recommendations to helping customer’s reach financial goals, AI will come into every aspect, that it will be taken for granted.
For example, NLP chatbots that enable 24/7 customer service interactions to Machine learning (ML) that can spot patterns in customer behaviour to provide improved cybersecurity or translate in real-time. Or offering highly personalized products, offers, loans based on usage, credit risk and other criteria.
However, the real action, disruption and impact of AI will be in the back office, as banks automate more processes, call centres, onboarding, KYC for routine, operational and manual tasks, analyse customer data for highly personalised marketing, and improve their products and services.
Of course, we expect a slew of regulatory measures, security, and privacy improvements to cope with these changes.