The banking industry is undergoing a significant transformation due to the democratization of data, the explosion of hyper-personalization, the shift from transactions to embedded engagement, the acceleration of automation, and the reshaping of banking platforms.
Financial institutions need to embrace these megatrends to future-proof their organizations.
- Democratization of Data and Insights
Data is the lifeblood of any financial institution. The democratization of data and insights refers to making data and insights accessible to a wider audience, including both employees and customers. Customer Data Platforms (CDPs) seamlessly integrate data and make it easier than ever to collect, analyze and deploy solutions using large volumes of data.
The democratization of data and insights has the potential to improve the experiences of employees as well as the people they serve. Banks and credit unions can use data and insights to build new products, offer personalized financial advice, and optimize operations for maximum efficiency.
- Explosion of Hyper-Personalization
With the use of significantly larger amounts of data, such as browsing and purchase history, interests and preferences, demographics and even survey information, hyper-personalization is now possible.
Advanced technologies that include facial recognition, augmented reality, and conversational AI allow financial institutions to offer customers highly personalized experiences that cater to their unique delivery preferences – in near real-time. Virtual assistants that act as digital twins and work on our behalf with trust will increasingly become the norm, offering personalized solutions that are tailored to our individual circumstances.
- Shift From Transactions to Embedded Engagement
Traditionally, banks and credit unions have viewed their relationship with consumers as a series of transactions. However, in recent years, there has been an increasing focus on providing a seamless and integrated engagement opportunity that can result in a more stable and long-term relationship.
This can involve a variety of tactics, including real-time contextual marketing messages, loyalty programs, and financial content and education.
- Acceleration of Automation
Automation is already changing the way financial institutions work. Technologies like artificial intelligence (AI), machine learning, and robotic process automation (RPA) are being used to automate repetitive and manual tasks, reduce costs, and improve efficiency.
This trend is expected to continue in the coming years, with automation being used to automate more complex processes, such as credit underwriting and fraud detection.
- Platforms Reshaping Banking
Platforms are emerging as the new way of doing business. Platforms like Amazon, Google, and Apple are already reshaping industries, and banking is no exception.
Platforms are creating ecosystems where financial institutions, third-party developers, and customers can interact, collaborate and create value. This trend has the potential to fundamentally alter the way we think about banking.
Final Thoughts
The banking industry is undergoing a significant transformation, and financial institutions need to embrace these megatrends to future-proof their organizations. The democratization of data, explosion of hyper-personalization, shift from transactions to embedded engagement, acceleration of automation, and platforms reshaping banking are all components of the digital banking transformation process.
These trends are not only shaping the future of banking but are also changing the way we interact with money and financial institutions. Banks and credit unions that invest in data, insights, and modern technology and build the right collaborations will be the ones that thrive in the future.
