The turbulent economic landscape of 2020 and 2021 caught retail banking companies off guard, forcing them to set their old business models aside and consider new revenue streams. The coronavirus pandemic was a catalyst for retail banks nationwide to reconsider their legacy mindsets and become more digitally resilient, but what does the retail banking landscape look like in 2022? Let’s look.
What is digital banking & digital banking services?
Digital banking is the process of conducting financial transactions electronically, rather than through traditional means such as visiting a physical bank branch. Digital banking services encompass a broad range of activities, including online banking, mobile banking and remote deposit capture.
Why more customer-centricity with retail banking?
At the very top of the agenda for most financial institutions in 2022 is customer-centricity. There will be a focus on delivering a superior customer experience, alongside operational excellence in 2022 and beyond, as it becomes essential for retail banks to invest in emerging technologies to remain resilient and relevant.
Machine learning and artificial intelligence is now widely used for fraud detection and prevention, as well as for providing tailored services and products to customers. In addition, chatbots are being used more frequently to provide round-the-clock customer service, which is a huge advantage for banks as it allows them to free up staff to work on more complex tasks.
New models have to be made as the general public needs to make informed decisions. FINMA LSFIN, or European MIFID are making the retail advisory market nearly impossible.
Intelligent process automation
According to the financial consulting firm, McKinsey & Company, approximately 50 billion devices will be connected to the IoT (Internet of Things) by 2025, as virtualisation and process automation become commonplace.
3D printing, automation and robots create approximately 79.4 zettabytes of data annually, offering improved insights for greater efficiency and improved decision-making for retail banks. The use of process automation tools in banking, such as digital process automation (DPA) and robotic process automation (RPA), is predicted to continue to grow this year, supported by intelligent automation.
Prioritising digital processes, such as digital loan application management, customer onboarding and new account opening, is essential to create an enhanced customer experience for credit unions and banks alike.
We have seen with InvestGlass banking customers that RPA is now a must. We have built a process for buy now pay later, KYC remediation, cash flow alerts. Digital transformation is also accepted among the leaders and management of banks. Business models are turning to include more services that can be automated.
Applications for mobile banking and payments will continue to soar in popularity, as customers become more comfortable with using their phones to make transactions. In addition, biometric authentication is being used more frequently to improve security and reduce the risk of fraud. This technology uses unique physical attributes, such as fingerprints or facial features.
Ready for cybersecurity in retail banking?
The financial consequences of cyber threats can be dire for the business prospects and reputation of financial institutions. The increase of online data transmission and mobile technology in 2022 will likely lead to a higher risk of both external and internal cybersecurity breaches. : Apple Pay and Google Pay have respective market shares of 43.4% and 25.0% in proximity mobile payments, a nearly $247 billion market.
At the beginning of the pandemic, financial institutions rushed to implement remote working company-wide and pushed their digital banking transformation initiatives forward, leading to increased cyberattacks. In 2022, protecting critical infrastructure and customer information from these cyber threats is more urgent than ever.
Banks are increasingly replacing passwords with biometrics to provide their customers with an additional layer of protection. We are working with the European fintech ONFIDO for this type of onboarding process.
With the recent attack in Ukraine, we will see some new type of threat in the US and Europe. Free movement of cash will be more complex. Of course, this will not affect basic shopping basket operations.
And this covid situation has been horrible for data sharing! Too much data sharing has been realised with counterparts not properly protecting investors’ rights. You certainly heard about the GDPR regulation. GDPR regulation is supposed to protect EU citizens from their personal data being mishandled by organisations. However, it has been criticized for hampering international cooperation between law enforcement agencies.
Which cloud computing?
To address the increasing need for speed and capacity, both credit unions and banks will likely look to cloud computing solutions to support applied analytics and store data. This can lead to reduced risk of business continuity and security breaches, improved innovation, enhanced efficiency, and increased customer insights. Cloud solutions offer a significant organizational advantage and offer insights that can improve human productivity and benefit back-office and front-office transformation. The rise of banking-as-a-service (BaaS) also accounts for an increase in digital services but which cloud are they using ?
We have been very sceptical of banking turning to Google or Microsoft cloud for security and privacy reason, particularly since the new Cloud Act law. The Cloud Act gives US authorities the right to seize data stored on foreign soil, including data belonging to banks and their customers.
This issue is compounded by the fact that many organizations are still struggling to get a handle on the complex and sprawling digital infrastructure they already have in place, let alone take on new cloud-based services. So, while cloud-based services will depend on the US checking what is inside the bank server ultimately…
With InvestGlass, which is a Swiss family-owned, Swiss hosted solution, we offer banks a unique opportunity to host the data on Swiss servers or even directly on their servers! We believe that the European and Swiss banking industry deserve embedded finance solutions on Swiss servers. This is the best way to make sure that the entire financial process remains on servers you control.
What are the advantages of cloud computing ?
– Scalability. Scalability is the ability of a system to grow or shrink to meet the changing needs of its users. A cloud-based solution can easily be adapted to fit the needs of a growing organisation.
– Cost-effectiveness. Cloud-based solutions are typically less expensive than traditional IT solutions, because businesses only pay for what they use.
– Agility. Agility of fintech help retail banks to move quickly and easily to adopt new technologies and services, which can give them a competitive edge. We will also see more artificial intelligence (AI) in the retail banking sector. Banks are using AI for a number of different purposes, such as improving customer service, fraud detection, and credit scoring. In 2022 is fintech’s demonstrating business profitability by providing genuine value so that their customers start paying for their services.
– Mass customisation. Inspired from an author we love at InvestGlass – Mr. Joesph Pines
By implementing cloud computing in 2022, retail banks can react quickly to changes in the marketplace and create efficient, responsive, scalable and flexible solutions to replace on-premise infrastructure. With cloud services, smaller banks are now able to compete and drive innovation at a lower cost.
Public, private and hybrid cloud computing allows retail banks to reduce their operational expenses and offer more agile services to remain competitive in the future and embrace digital transformation.
Talk to our team today to learn more about the benefits of CRM for retail banking.