Banks are probing partnerships, new business models, avenues for growth, and ways to individualize offerings.
FREMONT, CA: The banking industry is undergoing a dramatic change in which traditional players struggle to stay relevant in product offerings, future-ready innovations, the seamless and individualized customer experience at every touchpoint, and service engagement. In addition, competition from BigTechs and challenger banks adds complexity and encourages banks to move beyond traditional products to meet changing customer requirements.
A new ecosystem has appeared – Open X, which is characterized by more effective and open collaboration with new industry players like FinTechs facilitated by API application programming interface) standardization and shared customer data insights.
Thus, banks are exploring partnerships, new business models, avenues for growth, and ways to personalize offerings. Incumbents are considering the point of sale financing and unsecured consumer lending and enhancing their digital channels expertise to achieve a broader customer base.
The growing impact of BigTechs, such as Google, Amazon, Facebook, Apple, and other high-tech players, has elevated the bar for customer service and persistent user experience. Progressively, banks are turning to design thinking methodology to comprehend the customer journey, extract deep insights, and grow a user experience across the customer lifecycle.
Technological developments also have created a gap between the existing skill sets of the incumbent workforce and the capabilities necessary to implement those technologies. Awareness is growing about the significance of building a future-ready workforce to retain ongoing relevance.
Training programs are being designed and implemented to foster a digital mindset among bank employees. The intelligent bank of tomorrow is on executives' tactical radar screen.
Latest cutting-edge technologies allow banks to innovate existing processes to satisfy growing customer expectations. Banks are considering machine learning (ML) and artificial intelligence (AI) to create a persistent customer journey across different bank-customer interactions. Know Your Customer (KYC) identity verification is a growing blockchain-enabled trend explored industrywide by major banks.
Investment in technology to satisfy regulatory compliance is a growing industry-wide requirement encouraging established banks to cooperate with RegTechs. The goal is to understand the full potential of technology to meet guidelines and create a competitive advantage.
As a result, consortia of banks, RegTechs, and regulators are developing collaborative stakeholder ecosystems. In addition, banks are investing in development programs both within and outside the bank to encounter changing market forces.
1. There is a growing need to prepare a workforce for the digital age
Retail banks are arming employees with digital competencies to cope with the industry's rapid technological disturbance.
2. Banks are cooperating with FinTechs to explore point-of-sale financing
Point-of-sale financing demands consumers who want more flexibility than traditional credit purchases.
3. Banks are gradually beginning to explore unsafe consumer lending through digital channels
The unsafe digital lending market is a new business source many institutions have yet to exploit.
4. Blockchain solutions being employed to improve KYC and identity management programs
Banks see blockchain technology streamlining KYC and identity management programs to effectively manage regulatory needs.
5. Banks embrace design thinking
Banks are conducting workshops to obtain first-hand insight into customer requirements and expectations and then build digital prototypes around the learnings.
6. Banks are leveraging AI to create a seamless customer onboarding journey
Banks are improving relationships by streamlining services that involve customer interactions thanks to AI.
7. Collaboration with RegTechs continues to rise
Growth in the number of regulations and the associated cost of compliance creates traction for RegTech adoption among banks.
8. Technology invention is driving banks' risk-compliance initiatives
With technological innovations, banks can meet regulatory requirements and subsequently leverage this to obtain a competitive advantage and deliver customer-centric solutions.
9. The Open X ecosystem of the future will require players to work collaboratively
Banks cooperate with ecosystem players and leverage shared markets to help them establish pivotal roles within the Open X ecosystem.
10. Contextual banking empowers banks to offer superior customer experience
Banks are leveraging new-age technologies to provide a contextual banking experience – a concierge-like service in which customers are offered products at the right place and time.
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