Digital Banking Trends: customization and inclusion

Some major trends in the banking business are not completely new but are now re-emerging with additional strength as customers move towards new digital platforms. The first of all is Adaptability. It is often said that “It is not the biggest or the best that survive, but those who adapt the quickest”. This was never so true as at the present time, when technology is rapidly changing consumer habits, business dynamics, and even personal relationships. Banks and credit unions need to undertake this digital revolution in the quickest fashion and with the most accurate technology possible. The second is Customer First. Nowadays, banks must focus every effort in adding value to their customers’ life, offering engaging solutions, with simple layouts, in a totally customer-centric approach.

Five trends to follow: from open banking to financial inclusion

The digital banking revolution brought endless opportunities for the financial sector, and banks and credit unions are being challenged to explore new paths.

Open Banking, a major trend that symbolizes a new era will continue to reshape the banking industry. With the use of open Application Programming Interfaces (APIs), fintechs can now access to data from the banking sector and build applications and services around each financial institution. This practice has become a driving force of innovation. Open Banking helps customers to securely share their financial data with other institutions, enabling fintech companies to develop new services and features, and, at the end of the day, facilitating day-to-day operations. For example, the usually onerous process of switching from using one bank's checking account service to another bank's is now easier than ever. Open Banking offers agility to financial institutions and probably it will keep evolving beyond what is already established.

Alongside Open Banking, there is another major theme that every financial institution must look into: Cybersecurity. Cyberthreats are on the rise nowadays, and with the increasing sophistication of cybercriminals, banks and financial institutions need every advantage in the information security fight. This is solely possible with robust solutions, that comply not only with every security rule in force, but also with the best practices on the market. When updating their digital platforms, cybersecurity may seem a major challenge, especially for smaller financial institutions trying to design their solutions in-house. For these banks and credit unions, the solution rests on pre-built platforms, with top cybersecurity standards and frameworks.

But standing above all else, there is a macrotrend that is truly reshaping the banking sector: the ongoing process of Humanizing the Digital Experience. Technology has proven, since the beginning of the digital revolution, to be an effective tool to perform mechanical tasks, such as transactions and payments. But organizations have always struggled to provide a connected, personalized, and intuitive experience. The next step is to move from mechanical solutions to a truly humanized digital experience, to connect financial institutions with their customers’ projects and business goals. Today, it is not enough to be digitally efficient: banks and credit unions need to create longstanding and trustful relationships, and technology can be a shortcut to create this new banking experience.

With this effort in mind, another important trend has been emerging in the banking sector: Customization. Today, the most up-to-date banking platforms use data mining tools and Artificial Intelligence (AI) to evaluate their customers’ behavior and predict future market trends. This is a major step to improve the customer experience. Banks and Credit Unions can adjust their financial services to meet their customer’s priorities. With a flexible digital banking platform, with state-of-the-art customization capabilities, financial institutions can nowadays change their catalog with low amounts of coding, and without requiring additional IT support. If their platform offers an omnichannel approach, the equation is even simpler: “write once, run everywhere”.

Finally, the digital revolution is leading to another game-changing phenomenon: Financial Inclusion. A large population of unbanked people is, for the first time, being included through digital platforms. This is especially noteworthy if we consider that unbanked and underbanked populations are disproportionately women, people of color, and young adults. Worldwide, 56% of the unbanked are women, and 30% of unbanked adults are under 25 years old. By enabling larger distribution models – far beyond the physical constraints of the branch network – and offering personalized financial solutions with reduced operational costs, digital banking opens the door to the inclusion of these consumers.

Predicting the future is always risky – all we can do is to try to minimize surprises with flexible and adaptable solutions– but some major trends are reshaping the future of the banking business. Digital platforms are creating the bank of the future, and there is no doubt that it is going to be increasingly customer-oriented, with new technologies fostering the connection between financial institutions and their audiences, not only with people who are used to banking services, but reaching a new wave of consumers, who will finally embrace their financial opportunities.