Technology majors, Fintech companies and digital upstarts are gradually strengthening their foothold in the financial services sector. Non-banking players are also perceived as drivers of modernization in this sector.
Let us explore the Business Trends that will influence and reshape the banking industry over the next couple of years.
• Business model innovation and Open banking on the rise
Full-stack banks are expected to give in to the marketplace models and distributor in the open economy. Open banking and business model modernization are thus on the rise in banking this year. With a view to refining their strategy and vision this year, banks will develop their roles as distributors, marketplace operators, product manufacturers, or a combination of the three.
As distributors, banks and non-banks will collaborate to generate new value, particularly through innovative utilization of channels. They will sell their products as well as third-party products through their own channels.
As marketplace operators, banks will expand their partnerships with a view to bringing the best products and services available by means of extensive analytics resulting in improving and fulfilling customer expectations.
As product manufacturers, banks will ally with their ecosystem partners to build banking products by adopting the API route.
• Customer journeys gaining importance
This year and in all the forthcoming years, banks will be able to co-relate between their business performance and the quality of customer experience with them. So customer journey is expected to be a key trend in banking henceforth.
The customer journey will start in advance, at the point of intent or key requirement, even before the customer begins looking for a banking product or service. For example, the journey of a mortgage customer will commence right from the time he goes hunting for land or property and not when he comes up to them for a secured business loan. Accordingly, the need for domain experts in user experience and customer psychology will also be on the rise to devise journeys for different types of customer behavior.
• APIs starting to grow up
APIs will be the key tool for banks attending customers seeking more value schemes or enhanced offerings from banks like providing all-time lowest interest rates in case of secured business loans. Moreover, the integration of data from external sources into a range of products and services will also be carried out by banks with the help of API technology and Fintech.
• Cyber Security becoming a primary focus
Security will be the primary focus in 2019 and in the following years. With hackers creating unprecedented threats, the need to invest in robust security tools to combat such exploitations will grow immensely. Banks will invest more on cybersecurity solutions and network security as a cyber threat continues to intensify.
• Change in banking workforce culture
With an aspiration of a workforce well-versed with all the latest process and Fintech with respect to the industry, customer, business and organizational issues, banks will need to provide extra training on market needs and real-world challenges since today’s GenZ university graduates are not market-ready.