For some time now, banks and other financial institutions have tried their best to keep up with consumer marketing and to meet changing customer requirements. This is the main reason why recently we have seen a massive shift in how banks build their strategies for growth through personalized customer journeys and experiences.
They have been putting a new focus on innovation and turned to sustainable growth measures. To stay relevant in the future, many financial institutions have turned to certain banking trends that shape the current landscape so they can navigate the evolving demands of the industry.
In this article, we’ll take a look at the top four financial services industry trends that are making a positive impact.
From a regulatory perspective, the last decades have shown to be one of the most transformative periods for the global financial industry. Financial institutions have had to evolve and authorities have taken unprecedented steps to ensure that consumer protection is maintained during all business activity.
Open Banking is one of the most comprehensive transparency practices, requiring large banks to disclose customer data with third parties. At the heart of it is an application programming interface (API) that allows a service’s database to synchronize, link, and connect with any application.
Many financial institutions use quick, convenient, and cost-effective software interfaces such as WHOIS API, using it to monitor corporation domain assets and brands. It is also used to enhance business intelligence for companies and create new investment opportunities. In addition, it is used to detect transaction fraud and identify all connected domains, websites, and IP addresses associated with fraudulent activities and criminals.
Consumer expectations and behaviors have been profoundly altered as a result of digital transformation and business model innovation, putting enormous pressure on companies. Digital transformation takes place in response to changes in digital technology, which increases digital competition and customer conduct.
This also applies to financial institutions as customers are increasingly demanding to interact with them at any time and any place. As a result, they need to strengthen their digital business models and if they do not offer a great digital experience, many customers will move to competitors in the same industry.
With the adoption of emerging technologies, the financial services industry introduces operational efficiencies and enhances speed-to-market. Banks can cut down on branches and instead invest in self-service channels. Digital wearable devices make it easier for banks to offer targeted services and deliver superior experiences for customers.
The development of artificial intelligence (AI) is advancing at a rapid pace and more people believe that the increased use of AI benefits the vast majority of industries. AI automates processes and creates better financial planning.
In the financial industry, for example, AI can create stronger protection against money laundering and fraud. Some of the biggest gains with AI are precision and analysis of real-time data, which means that many simpler and more repetitive processes in the financial industry can now be automated.
The ever-expanding use of AI is evident in customer service too. For the banks, it is about both making customers happy, but also making as much profit as possible. AI occurs mainly in the form of chatbots, which are to a large extent more cost-effective and faster than humans in performing recurring services at the bank.
When employees in the financial industry avoid simpler and monotonous processes, they can instead concentrate on understanding the customer’s situation and offer more professional feedback and insights, which leads to creating more meaningful relationships.
Slowly but surely, financial institutions and banks have started to realize that personalization is not a passing trend but one that helps them gather customer insights while maintaining privacy.
As a new generation of consumers emerges, there is an increasing need for them to be treated as individuals rather than segments. This is commonly referred to as hyper-personalization, and it means that banks allow customers to customize their banking products to meet their personal needs, circumstances, and preferences, as well as to choose from a wide range of benefits that suit their reality. This is the opposite of the one-size-fits-all approach that banks practiced in the past.
By embracing such a level of personalization for customers, financial institutions will succeed in responding to customers’ latent needs, setting their brands apart, multiplying their revenues, and driving and building trust.
FinTech is a collective term for all technological innovation in the financial sector. It is used by players in the financial sector who, through innovation and modern technology, digitize, automate or tailor their products and services.
Traditional banking services are often both more expensive and less user-friendly than FinTech services. FinTech developments have pressured banks to become increasingly tech-focused, create their own services and solutions, and partner with FinTech companies to build their digital experience. Partnerships between banks and FinTech companies are becoming the norm and reshaping the financial services landscape.
With increasingly fierce competition, financial institutions that lack the ability to automate, personalize, and digitize their products and services have a real challenge ahead of them.
Trends like API technology, digital transformation, and hyper-personalization, will rebuild the financial services industry, drive financial industry conversations, and allow them to stay relevant and grow their market share.