Disruption in the market will drive the need for change
Digital services are here to stay. Just look at the popularity of Spotify, Netflix and Amazon – people are used to managing many areas of their lives online and that same digital-first mindset has filtered into banking. Forward-thinking banks and financial services providers are leveraging digital-first technology and releasing new products for tech-savvy customers and I see this trend continuing into 2020 and beyond.
In 2019, we saw the US launch of the Apple Card and Goldman Sachs’ online savings account Marcus. Both use digital client onboarding, so I expect in 2020 we will see an acceleration of this trend towards digitalization.
Banks will also be looking to move towards humanless, more automated processes during 2020. They need to focus on creating a completely digital account opening process and manage data centrally far more effectively for a faster, frictionless service.
Banks that have been slower to adapt need to get further along the digital transformation path as soon possible, so they can start offering a more streamlined client experience in order to compete, retain customers and gain market share.
And to do that, their systems need to be up to the job.
Banks must deal with legacy IT issues
Many banks will still be operating with legacy technology in the 2020s. Legacy systems add a high-level of friction to the customer journey. There’s a continued pressure on banks to reduce the amount of unnecessary touchpoints with their customers, but legacy structures are not designed for this way of banking in 2020.
The drive towards digital transformation is there, but generic IT suppliers in the banking sector just aren’t delivering the solutions. Therefore, banks need to work with specialist financial IT solutions providers to streamline the customer experience.
Digital profiles will play a key role in Commercial, Business and Retail banking
Over the next decade, I expect to see digital profiles come into play in a big way. Individuals will have a digital banking profile that’s tightly secured and managed. I see a future where we’ll be just as accustomed to using our digital banking profiles as we are to our professional profiles on LinkedIn, or email and social media platforms in previous decades. And this digital profile will make it much easier for people to move their information across banks and financial institutions and open accounts more easily. In many ways, you could say that banking will become part of our digital identities.
We’ll see enhanced security around digital banking with technologies such as blockchain widely used. Blockchain could play a key role in client onboarding and authentication, for example, as part of banks’ Know Your Customer (KYC) processes.
We will continue to see increased pressure to make sure banks have a real-time holistic view of the customer not just from KYC standpoint but transaction monitoring standpoint. Those things combine to make up the overall risk of a client to the organization.
Data-led approaches will be a key area of interest
Banks will be interested in innovation and differentiating themselves and their offering from their competitors. Many will see the benefit of using a platform to take care of the operational tasks, such as client onboarding, KYC and Anti-Money Laundering (AML), so they can focus their own efforts on creating stand-out offerings.
It doesn’t make sense to pour time and talent into handling those operational tasks, when they can be so easily be taken care of via a solution, such as those provided by Fenergo. It’s smarter to focus effort and budget on value-add activities because ultimately, it’s going to be those differentiators that determine whether banks win and retain customers.
Overall, I expect to see forward-thinking banks making stronger, more strategic decisions as we head into the next decade. Change is coming and those that embrace it and use it to their advantage can look forward to an exciting future.
Is your organization in good digital shape as we begin this exciting new decade?