As we look back at 2021, we witnessed many banking industry challenges both around the globe and in Europe. Banks modernised their branch and self-service infrastructures, ATM pooling initiatives were implemented, and there was a focus on access to cash by governments and consumers.
Now that 2022 has arrived, Auriga predicts five key trends likely to be seen in the next coming months within the banking and financial services industry.
1. ATMs and bank branches continue to disappear
The role of bank branches and ATMs are being challenged and could be under threat. The operational costs for running ATM fleets are increasing, and banks are expected to meet the additional costs of preventing and mitigating fraud and cyber-attacks on physical machines and their IT networks. Banks are continuing to shut down cash machines, instead of actioning policies that minimise the total cost of ownership, provide protection, as well as improve, modernise, and personalise customer experiences.
There will be a tremendous impact on customers who need access to bank services or cash locally.
Therefore, what banks should be doing is using their branches to exploit a renewed appetite for personal services and focus on restoring customer loyalty; as by ignoring the needs of their valued customers, an accelerated migration to alternative providers may occur.
2. Video banking
Large retailers and businesses across Europe are redefining the customer experience by offering video-based services to replicate the in-store experience. This trend is likely to continue in the retail banking in 2022, as it allows customers to conveniently use in-store services from the comfort of their homes.
However, as banks seek to deliver virtual banking services in their customers’ homes, it is critical that they also provide quality service in their branches and ensure that all customers can access complex banking services in a secure environment.
3. Digital Onboarding and Digital ID
In the context of the progressive digitisation of the financial system, digital financial identity will take priority. This is already visible in other countries such as Norway, Sweden, Denmark and Finland. In 2022, the goal is to build a system solution that enables “smart onboarding” for customer recognition in order to make it simple, fluid and fast; allowing the customer to access a variety of banking services.
With digital smart onboarding, enormous advantages would be obtained; not only in terms of resource management, but also of data management and updating, to the benefit of the customer experience. Onboarding optimisation in banking, however, means reconciling very different needs. This includes those of the customer, such as people who would like to open a current account or complete a transaction with their smartphone, and those of the bank.
This ensures each of its processes is not only compliant with existing legislation, but also based on risk management best practices.
In 2022, the banking sector is likely to see more banks closing branches due to the reduction in customers using legacy banking channels. There are also cost pressures, a reduced footfall, as well as the emergence of digital-only services and challenging banks. Even though closing branches is considered a way to reduce costs and increase efficiencies, it also damages customer loyalty and business reputation. Therefore, banks will need to completely review their branch strategies in 2022 and evaluate how to incorporate an innovative approach.
One way that banks can do this is by adopting a #NextGenBranch solution as it encourages the development of a state-of-the-art, customer-focused, and remotely-supported digital branch. The #NextGenBranch is unique as it allows all banking channels to be managed on a single software solution that enables a real omnichannel banking experience; in both digital and physical environments.
In this new model, the customer will be able to access all banking services in the dock station. It brings together the teller, self-service, banking consultancy and the sale of financial products to offer a complete and secure access to the bank; with 24/7 assisted service. It also provides a holistic protection model that goes beyond just cybersecurity, by integrating sensors and cameras for remote monitoring.
5. Infrastructure overhaul
Infrastructure overhaul will be a huge trend in 2022. New ATM developments that preserve and expand access to cash and services are hindered by legacy infrastructure. Therefore, without a major change to the infrastructure, the channel will be unable to modernise and function alongside the next generation of delivery channels. It can also give banks an advantage when supporting strategic initiatives such as lean bank branches and ATM pooling.
What’s next for 2022?
In the next 12 months, digital self-service banking will be at the heart of branch transformation initiatives. Financial institutions will invest in technology and alternatives to avoid banks losing connection with customers and communities, including those that suffer from reduced access to cash and financial services.