The banking industry faces innovative retail banking trends in 2020 with powerful forces reshaping the sector and creating an imperative for change. Banks and other financial institutions must choose what course of action to take – to either lead the change, follow trends, or manage for the present.
Whatever their strategy of choice is, it’s critical for banks to develop new, innovative solutions by taking advantage of big data, transactional and behavioral analytics, digital technologies, and novel delivery platforms.
From making transactions move faster and smoother to the changing and evolving role of retail banks, it’s not entirely clear what the trends discussed below will mean for the sector and the financial industry as a whole. However, the consensus is that the retail banking trends for 2020 discussed below will favor consumers.
6 Retail Banking Trends for 2020
1 – The Expansion of Open Banking
Many view open banking as a European issue and a threat to traditional business practices – the latter is correct. It refers to any initiatives by banks to open their APIs to third parties, giving them access to the bank’s data and functionality. You can use the term open banking interchangeably with API banking, open APIs, banking-as-a-platform, banking-as-a-service, or ecosystem banking.
The concept for open banking encompasses the need for banks and other lending institutions to respond to consumer pressure for painless and straightforward financial experiences. For instance, to buy homes, transfer and receive payments, or manage their financial lives. Fintechs and other big tech companies have already started leveraging the API banking ecosystem to offer financial services.
2 – Real-Time Financial Products
Banks and consumers alike are driving demand for services and products that they can interact with in real-time. This development will see real-time payments become the expected banking norm in 2020. What’s more, the conversation is sure to shift from how banks can set up for a real-time experience to what they can do to become more competitive and attract clients by leveraging real-time payments.
APIs will play a significant role in real-time growth since the fintech community requires them to interact with the banking services that their customers need. Therefore, retail banking trends for 2020 will focus on setting up new, innovative real-time payment services that attract fintech companies and consumers.
3 – Commitment To Digital Delivery
2020 is already shaping up as the year of enhanced digital banking consumer experiences. The industry is ripe for change thanks to the development of new, incredible technology both within and outside the sector that supports digitalization.
For those still mostly offering traditional banking services, they will shift their primary focus to the integration of new technologies and the enhancement of digital offerings with an emphasis on more value and personalized client experiences.
4 – Always-On “Invisible” Banking
As the business world enters the post-digital age, financial institutions will seamlessly integrate their financial services into the daily lives of consumers. This trend has taken the moniker “invisible banking.” An example of an invisible banking transaction is direct deposits.
Technology has created what experts refer to as an “always-on” world where business opportunities appear and evaporate quickly. A time will come when it will not be enough to have the right products and services, but banks must also recognize the exact moment when consumers need them.
5 – Intelligent Assistants and Voice Banking
Thanks to the rapid consumer adoption of voice and digital assistants, it’s now imperative for banks and other lending institutions to seriously consider the implementation of these services. Statistics support this assertion with a 78% growth of voice assistants and smart speakers users in the U.S.
Already, a handful of large banks have invested in digital assistants, including Capital One, Barclays, BofA, USAA, and U.S. Bank. Some smaller institutions like Mercantile Bank of Michigan have also followed suit.
6 – AI-Driven Predictive Banking
The ability to observe, analyze, interpret, and catalog the actions of your bank customers (while respecting their privacy) allows you to design and deliver rich, individualized experiences that will help build customer loyalty during the post-digital age.
Therefore, the banking industry is leaning towards the consolidation of all internal and external data to build predictive profiles of their customers in real-time.
Banks with a competitive edge in the market will go a step further to help their customers optimize their spending, give them preferred access to excellent deals, and nudge their behaviors in a way that creates a better long-term financial health.
One AI challenge that many institutions face is finding a balance between privacy and proactive insight, which is where transactional and behavioral analytics apply.
The Bottom Line
As the financial services industry undergoes rapid change and retail banking trends in 2020, institutions must invest in transactional and behavioral analysis to remain competitive, increase customer experience, and meet strategic goals.
Since 2002, IFM has been providing clients with cutting edge technological solutions, near real-time insights, predictive machine learning-based intelligence, and behavioral-based triggers. IFM’s proprietary processes is what allows them to provide banks with a data standardization solution and near real-time behavioral insight.
Rob Reale is an Associate Partner and National Sales Manager responsible for business development and sales at Insight Financial Marketing. Rob began working in the Mortgage Banking industry in 1990 and currently helps the financial service industry leverage unique and innovative solutions.