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The banking industry is experiencing a major shift towards digitalisation. As we head into 2023, it’s important to keep an eye on the latest trends that are shaping the future of banking. Staying ahead of these trends is crucial for retail banks to stay competitive and provide better services for their customers, especially in this age where customer experience is king.
In this blog post, we will explore some of the most notable trends in retail banking and fintech that we can expect to see in 2023.
- Collaboration made easy with platform-based ecosystems
- The continuous rise of Banking-as-a-Service
- Enhancing the digital onboarding experience
- Infrastructure sharing as a path to deflect bank branch and ATM closures
- Securing the future of retail banking with Zero Trust
- Increased need for Artificial Intelligence in banking
- Protecting access to cash
In this interconnected modular digital world, acting alone is too onerous for most companies. As such, working collaboratively to complement, adjust and support joint efforts is essential to leveraging digital ecosystems. This shift towards platform-based ecosystems is expected to gain momentum in 2023. With this approach, it is possible to start integrations and collaborations with new partners quickly and easily. It also has the ability to create bundles of integrated services to make the most of new business opportunities, making growth and innovation possible in an efficient and sustainable way and improving the final user experience.
Banking-as-a-Service (BaaS) allows for personalised solutions and services to be offered through open platforms, with payments brought to open platforms and combined with other services, from a commodity becomes a potential differentiating factor. As a result, we can expect to see an increased convergence between platform providers and specialised payment solution providers in the future to offer the best solutions and seamless customer experience for end customers.
The key to frictionless digital onboarding is to make the process as simple as possible while ensuring that all necessary information is collected. Frictionless digital onboarding requires a user-centred design approach that puts the customer at the centre of the process. This means understanding the customer’s needs and providing a personalised experience that is tailored to their specific requirements which creates a seamless experience for the customer, making it more likely that they will complete the onboarding process and become a loyal customer. In doing so calls the need for solutions that can aggregate data to overcome fragmentation and to verify them with many of the most innovative technologies available on the market including biometrics, artificial intelligence and anti-fraud controls.
In 2023, we can expect to see more banks adopting an infrastructure sharing model to address the challenges of branch and ATM closures. This trend will involve the use of white label branches, where a single location serves as a shared service centre for all banking activities, regardless of the customer’s bank. The white label branch also has the ability to offer further financial services in addition to access to cash. To work in practice, multiple banks are expected to collaborate by pooling their investments in ATMs to provide wider coverage of free ATM services in a specific area.
The complexity of the ATM ecosystem is increasing as technology and parallel threats evolve. Banks will be considering robust solutions or models like Zero Trust to deal with the vulnerability of systems with reactive update policies and third-party actors who have uncontrolled access to the devices. The Zero Trust approach, for example, provides protection for the self-service channel by shifting the paradigm from the legacy approach to offer a drastic reduction of the attack surface and full control of software and hardware changes.
The use of Robotic Process Automation (RPA) in retail banking. RPA allows companies to automate repetitive tasks, such as data entry and account opening, which can help to reduce costs and improve efficiency. This can help banks and fintech companies to better serve their customers and stay competitive in the market. However, implementing AI also requires a major organisational transformation and calls for the necessary changes in operations, personnel, and skills, while being mindful of risks, ethical and regulatory issues. Striking the right balance between control needs and the promotion of innovation is crucial when introducing AI.
With the rise of digital payments and mobile banking, cash management systems have become increasingly important for retailers and banks. In 2023, we expect to see more companies adopt these systems that, thanks to AI, can predict and make it possible to preserve and guarantee the possibility for consumers to better manage their cash flow and reduce the risk of fraud, all the while making the availability of cash and related services less expensive for the bank. This can help to improve the efficiency of retail banking and make it easier for customers to access cash.
2023 is looking to be an exciting year for retail banking and fintech, with a number of important trends that will shape the future of the industry. These trends will change the way that banks operate in addition to having a significant impact on the way that customers interact with their financial services. To get ahead of the curve, the banking industry is undergoing a rapid change, and the success of banks in the future will depend on their ability to adapt and embrace these trends.
