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Banking in the dawn of the new decadeeNewsletter Winter 2021

During 2020, Digital Transformation has evolved from trend to necessity. It became the key differentiator in the banking sector, driving banks to change and adjust to a new digital delivery model, as a result of the pandemic.

The rise of neo and digital banking became the new normal with features that give emphasis on mobile banking services. These trends and changes in people’s mentality are well described in established publications (Business Insider, Financial brand, fintech magazine, Forbes, etc.). We summarise below those that stand out as to what lies ahead in 2021 for banking.

  1. AI is expected to contribute a staggering $15.7 trillion to the global economy by 2030; 74% of organisations that implemented AI have increased sales of new products and services by at least 10% (Source: WUP)
  2. Automation with the use of AI, digitalisation of opening and managing customer accounts, enhancement of mobile services (based on client habits) are to receive a greater investment by banking organisations in 2021. (Sources: MoneyThor and UX Design)
  3. Introduction of Open Finance. Having moved to the next level, it is now the era of Open Finance as the extension of Open Banking data-sharing principles to enable third-party providers to access customers’ data across a broader range of financial sectors and products, including savings and investments.
  4. Sustainable Finance: Financial institutions are looking to address investment opportunities and provide lending to low-carbon and sustainable sectors. As a result, more and more banks recognize the need to integrate environmental, social and governance (ESG) factors into their investment.
  5. User experience in banking platforms becomes important, but not just for the end-user. Banks need to invest in redesigning the user experience from an employee standpoint so that speed and ease of use are experienced across users, leading to superior service provision. (Source: UX Design).
  6. Move to Cloud Computing: the extended use of new technology and digital offerings also increased the vulnerability of clients to online risks and fraudulent activities. Although slower than anticipated, there has been an increase in the use of cloud technology and cyber-security offerings, successfully restoring the sense of safety for both firms and consumers.
  7. New working models: Across the entire banking ecosystem, financial institutions are rethinking the way work is done, where it is done, and the skills that will be required to do the job. What initially was remote collaboration necessitated by a global crisis has recently become the new normal in a post Covid-19 era.
  8. Open Banking as a Revenue Opportunity: According to Juniper Research, the number of open banking users is expected to double in size from 18 mn in 2019 to more than 40 mn users by 2021. (Source for the above: The Financial Brand). According to Gartner, “The API economy is an enabler for turning a business or an organisation into a platform. Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value.”
  9. Banking as a Service will also fill in some gaps. BaaS platforms enable fintechs and other third parties to connect with banks' systems via APIs to build banking offerings on top of the providers' regulated infrastructure. So, launching BaaS platforms helps banks benefit from fintechs entering the finance space, as it turns them into customers rather than just competitors.

The list could be endless in terms of technology objectives and banking improvements.

Consuming the information on what to expect in 2021, key elements stand out. Banking platforms are evolving to accommodate modern and better design, incorporating the use of AI tools to strengthen personalisation of banking offerings. At the same time, front-end modernisation and user-friendliness allow users to navigate efficiently in the platforms, ‘offering’ a unique customer experience. Furthermore, the automation and streamline of processes allow banks to continue operations without disruption and increase their market share.

Profile’s banking platform allows traditional, neo and digital banks to achieve their business objectives through automation of tasks throughout the entire spectrum of operations. It is constantly being enriched with functionality and front-end features that offer a better, easier and more complete user experience while ensuring uninterrupted operations at any time. Download the brochure here.

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