In light of the constantly evolving global challenges, banking will look considerably different in ten years from how it does now.
Smartphones will significantly influence how customers handle their money as branch visits are being progressively replaced by banking apps. Bank cards will become obsolete, making smartphones a crucial component of how customers interact with financial institutions.
Cash handling, formerly a distinctive aspect of banking, will likewise be discontinued. Instead, the majority, if not all, of the currency will be digital. According to UK Finance, only 17% of all payments made in the UK were done in cash. With the expectation that this number will continue to fall over the coming ten years, there is plenty of room for digital payments to surpass all other payment methods.
Additionally, all financial hardware will probably be obsolete over the next ten years. The software will handle all banking transactions online and will be further optimised to improve the user experience.
Current client requirements
As legacy financial systems are replaced, there will be greater demand for seamless and individualised banking. Customers do not want to be forced to wait for payment clearances or receive generic services. All financial assistance must be customised quickly to keep the customers happy.
The future of banking appears to be one of complete accessibility and inclusivity. Peer-to-peer payments will be smooth regardless of where people bank, making it commonplace to send money to pals, recover shared expenses, or even just split a bill.
The struggle for customer retention and engagement will be another development to keep an eye on. Longtime customers of established banks have flocked to their services, but challenger banks like Monzo and Revolut offer customers more financial options. Finally, ensure customer loyalty. This will result in increasing rivalry between banks and generous reward programmes.
Gen Z’s expectation of banks
As they experience their first recession, Gen Z will require institutions to respond to their specific pain areas.
Banks that won’t penalise Gen Z customers for their lack of stability or financial understanding are what they seek. They want banks that understand their financial objectives. This generation will use banks as their financial advisor and place to put their first salaries.
The financial industry will be under more pressure to innovate, and this generation will be ready to voice their opinions.
Gen Z wants to spend and save at the same time. Therefore, they are seeking services like cashback offers that won’t significantly change how they shop. Although Gen Z must negotiate the cost-of-living crisis, they shouldn’t sacrifice their well-being.
The decade of banking after that
We will witness a radical transition from traditional banking to brand-new, hyper-personalised experiences. The financial economy is already boosted by fintech innovation, increasing business-to-consumer (B2C) and consumer-to-consumer (C2C) payments.
Gen Z is computer adept enough to adapt to the changes over the next ten years. In addition, they will make the most of digital opportunities to earn and save extra money.
Our interaction with financial services will be governed by our mobile devices, which will play a more significant role in our daily lives. As a result, we know that exciting developments in the financial sector and technological advancement will substantially impact banking over the next ten years. Watch this space.
Two in five consumers predict tech companies taking over the banking
The future of banking will undoubtedly be different and primarily digital.
According to the survey, traditional institutions, primarily regional and community banks and credit unions, have a window of opportunity to satisfy the demands and preferences of their potential clients and gain a competitive edge, but only if they move swiftly.
According to a nationwide poll by Alkami Technology, “Digital banking is no longer optional or a nice-to-have but a must-have that fosters growth, loyalty, and great experiences.”
Younger generations are “bringing fresh and different expectations that create a substantial potential for every financial institution prepared to adapt.”
The company surveyed 1,500 US bank account holders who use digital banking to varying degrees. In addition, the surveyors used the respondents’ age, region, gender, and ethnicity according to the 2020 US Census. Among the main conclusions:
Younger generations are vulnerable because almost a quarter of them are uncertain about the future of their present primary financial institution. People who interact digitally with their financial institutions, whether through websites or mobile applications, tend to use more products than those who don’t. The more frequently they do so, the more products they use. Customers of regional and local financial institutions are less likely than all other groups to think their financial relationship will improve over the coming year.
No matter the generation, offering a superb digital banking experience will significantly enhance the use of other products. Using digital platforms to deliver personal financial management services is a frequently underutilized strategy for attracting customers.
The window for trend analysis has passed
The harsh assessment that financial institutions need to move quickly to supply digital services for customers comes on top of the report’s main conclusions.
The survey claims that “consumers do not expect that financial institutions of the future will look like or do what financial institutions of the present do now.” On the other hand, it was discovered that 44% of banking consumers think a tech business will be a future bank.
Digital predictions
According to 65% of clients, most Americans will consider online primary banks.
The Alkami sample consisted of individuals who actively used online banking, as was already mentioned. The research did, however, show that the definition of “active” covers very fundamental activities like checking account balances, paying bills, and moving money—a pretty low threshold, in other words.
The research claims that everything “underscores the urgency and relevance of financial institution leaders acting right away to best adapt and serve consumers.”
The preference for primary financial providers is shifting
The two younger adult generations, Gen Z and Millennials, who range in age from 22 to 45, are more likely to say that their primary financial provider is a neobank, significant technology business, or fintech firm. Baby Boomers and Generation X are significantly more likely to use local, regional, or community banks and credit unions.
Regional and community bank growth
As account holders consider extending their primary financial institution connection over 2023, regional and community banks and credit unions are rarely at the top of their list. Only 27% of the customers who use those institutions the most anticipate increasing their deposits, loans, or other transactions. Comparatively, the percentages of consumers who predominantly used the different categories of providers—major national financial institutions (35%), neobanks (51%), fintech (53%), and extensive technology businesses (57%)—were all substantially more likely to grow their ties.
According to the study, “There is a striking divergence in expectations that may affect consumer behaviour. To address this possible risk to organic growth, regional and community banking institutions must act quickly.”
What is taking place right now is the future discussed five years ago, which seems like yesterday. Naturally, it is pretty unsettling to find that two-thirds of banking customers in a significant new study predict that in five years, most consumers will regard their primary bank as entirely online.
Millennials and Gen Z perceive large tech companies and online-only banks as more critical to their financial needs than regional/community banks.