Top Trends in Digital Banking to Watch in 2022
If COVID forces banks to adopt change in 2020 and 2021, then 2022 will be the year that we witness that shift institutionalized and the start of a new normal emerging. The pre-COVID tendency for incremental change and cautious experimentation has given way for the majority of the world’s top banks to a faster digital metabolism and a readiness to challenge existing business models, even if doing so cannibalizes traditional revenue sources.
New entrants are getting more ambitious in the range of services they offer as empowered clients become more demanding on a variety of aspects, from service costs to sustainability. Therefore, in 2022, the top banks in the world must rise to the occasion.
More control for consumers and small businesses
The growth of digital technology allowing banking clients and small-business owners more power tops Chase’s list of digital banking trends for 2022. Consumers are increasingly interested in using their phones to carry out operations like investing, sending money, and depositing checks.
Thus, banks and fintech (financial technology) start-ups alike are innovating in response to the demand for such seamless digital functionality, with more growth assured this year. “Consumers and owners of small businesses expect their banks to give more than just standard account options and to offer dependable tools and services to assist them in understanding and enhancing their financial well-being.
This includes giving them a lightning-fast overview of where their money is and how it’s being used, available at their fingertips,” Chase’s chief product officer, Rohan Amin, recently wrote. Consumers and small-business owners will demand more personalization, he added, which will lead to “hyper-personalized features that deliver tailored experiences based on real-time dynamic signals” about customers’ individual needs and profiles. “Key to those efforts will be clear segmentation.”
More “digital-only” banks
Challenger banks and neobanks—those digital-only banks that don’t have a single physical branch and provide all of their services exclusively through mobile apps—have been growing unabated over the past few years. It is simple to understand why they have recently become so well-liked given that they consistently provide better rates and fewer expenses than their traditional banking competitors.
Such digital-only banks are establishing a distinct niche among banking customers who want to keep their fees as low as possible as well as those who can realistically complete the majority of their banking requirements over the Internet or through their smartphones because they have fewer overhead costs to take into account.
Naturally, the pandemic’s acceleration of banking customers’ online migration has only aided the success of such digital-only institutions. Furthermore, with the pandemic still ongoing in many parts of the world, digital-only banks are expected to keep outpacing their brick-and-mortar competitors in terms of market share.
Expanding digitization across all service verticals
Although traditional banks provide a vast array of financial services, they are utterly unprepared for digitization. The lockdown has shown that the banking and finance sector urgently needs digitization. Even while the majority of banks worldwide were gradually implementing digital procedures, the pandemic showed their lack of readiness and efficiency in providing assistance to consumers.
Customers have to put their health in danger, for example, by going to a bank branch to complete their KYC or applying for a loan. Unfortunately, while being highly viable, banks did not adopt or properly use the technology to ensure remote service to customers. This situation gave an opportunity for fintech startups to step in and fill in the gap. Banks must take a lesson from this. They must thrive to deliver a better experience to consumers by expanding their digital offerings.
Implementing a customer-centric culture
Digital-first businesses are able to quickly change to meet changing consumer expectations. They can replace outmoded procedures with more modern ones, adopt newer technology, and alter products to suit the requirements of customers. Success in business nowadays depends heavily on the company culture.
If a customer-centric mindset is absent at the corporate level, even a well-planned digital transformation can fail horribly. For example, 79 percent of US consumers are interested in brands that know them and care about them, and 89 percent of consumers only want to interact with companies that go above and beyond.
Addressing the gaps
Whether it is a classic or modern banking system, there may be many gaps between what the client wants and what the brand can deliver. There is a good likelihood that the buyer will completely stop buying the brand if the difference is greater. When there were just a few banks in existence a few decades ago, it was challenging for clients to move banks.
Currently, customers can easily switch banks and choose a brand that would better suit their financial needs thanks to digitization. Financial institutions must close these gaps if they are to prosper in 2022.
Developing a consistent ecosystem
An issue with modern digital banking systems is the lack of consistency. Legacy banks experienced digitization in phases. It has led to a fragmentation of user experience. Visual elements across apps and websites look and behave differently. The Internet banking website, the apps, the ATMs: each have its distinct interface.
For example, the State Bank of India has multiple apps for investment, payments, and card management. They even have an app that unifies all these features. Each of them has a different UI and design system. This UX is also completely different from the user experience that the website and the ATMs provide.
Customers expect all channels to provide a consistent experience when using digital banking. A unified experience will help establish a smooth transition as the customer switches between different banking platforms.