‘If 2020 and 2021 were the years that forced banks to embrace change, 2022 will be the year in which we see that change institutionalised’.

The Financial Services industry is facing mounting pressure to deliver a digitally enhanced, hyper-personalised experience to customers and clients.

This will require banks to rethink and redefine not only their processes, but also their people strategy. Both established institutions and ambitious new entrants will need to consider how they craft a culture that champions agility and innovation, in order to attract some of the most promising tech-talent - or risk being left behind.

In the first of this mini-series, we reflect on some of the key trends emerging within the banking industry, exploring how technology is creating new opportunities – and threats – in the form of ‘Super Apps’, digital currencies and more streamlined, sustainable operations.

The Super App reigns supreme: A single portal, with a single sign in, to meet a range of needs. From social media and marketplaces to services such as Uber, the super app is consolidating many of our retail, social – and crucially - banking needs.

Having gained traction in the Asia-Pacific regions (examples include WeChat and Alipay), the super app threatens to disrupt the financial services sector, offering the functionality to check balances, pay bills and make deposits within a more integrated and streamlined interface.

And with ‘big-tech’ companies such as Apple and Amazon poised to grab ‘up to 40% of the $1.35 trillion in US finances revenue’, banks will need to consider how (or if) they can become an effective participant within these ecosystems.

Going digital: Digital currencies refers to any form of money or payment that exists electronically. This ranges from simple transactions such as online purchases facilitated by a traditional bank or credit card company, to more complex currencies such as Bitcoin, which are generally viewed ‘outside of traditional institutions.’

However, this separation is slowly eroding. The meteoric rise of the digital wallet, (set to represent 50% of e-commerce sales by 2023), the integration of blockchain and maturing regulations around cryptocurrencies are prompting a digital domination, challenging the need for physical ‘cash’ in a new era of finance. The European Central Bank, for example, is already exploring the introduction of a ‘digital euro.’

To remain relevant, institutions will need to incorporate these emerging forms of finance into existing models.

A more sustainable future: While thousands of organisations across all industries pledge to ‘go green’, a harsher spotlight shines on the Financial Services industry, as banks are expected to play a pivotal role in facilitating the funding needed ‘for the world to change its ways.’

With the Bank of America estimating that $150 trillion is needed to achieve net zero carbon emissions within the next 30 years, institutions are facing mounting pressure to cut ties with carbon-heavy companies.

But oil and gas have provided banks with ‘steady and predictable revenues’ that shareholders and regulators will be eager to preserve.

Banks will need to find innovative ways in which to balance their books, as they face a potential sacrifice to their bottom line in the short term. But those forward-thinking organisations that devise and implement a successful, sustainable strategy are set to reap the rewards, with research indicating that 54% of Gen-Z and millennial consumers would consider switching their primary bank based on Environmental, Sustainable and Governance (ESG) factors.

A balancing act: Following a flurry of pandemic-inspired innovation, many banks are applying Artificial Intelligence and Machine Learning to various back-office processes, deploying more advanced text and speech analysis to tools such as chatbots and equipping their apps with the functionality to carry out a greater range of basic transactions.

The result? Branch usage declined by an average of 35% between 2015-2020, with today’s customers anticipating that nearly two-thirds of their business with banks will be digital by 2024.

But efficiency must also satisfy customer expectation. As banks deploy a range of technologies to ‘accelerate their efforts’ toward the dream of zero-waste operations, 82% of consumers are asking for more human interactions from brands, with 36% of customers stating that they would prefer to talk to a ‘real person’ when solving issues, such as settling disputed credit card charges.

Simply digitilising an existing product or service will not equate to customer loyalty. Indeed, poorly designed digital experiences are a ‘primary attrition driver for banks.’ To thrive in a ‘phygital’ age of banking, organisations must be able to support customers as they jump from channel to channel, offering a seamless experience across the physical and digital environments.

The war for talent intensifies

As many organisations look to scale their digital infrastructure, banks will be required to compete for top talent – not only alongside direct competitors but also with technology firms who create a compelling value proposition with their offerings of ‘flexible time... deep pockets for benefits and seemingly endless no-cost perks.’

In Part Two of this series, we offer our specialist insights into how banks can build the future-ready workforces that will enable them to thrive in a new reality.

One that is digitally driven, but powered by people.

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• The future of financial services - part 2
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