Do you remember the first time you texted in for your balance, deposited a check with your smartphone, or paid a bill online? It was a glorious and efficient day. No more waiting in line at your financial institution; gone are the days of completing paper forms and waiting for them to be processed.
Since then, digitization in the financial industry continues to accelerate. Banks are beefing up their technology budgets to bring digitization and innovation to life in 2018. As the world of innovation continues to accelerate, banks are making the investment to ensure they won't be left behind.
In 2018, there will be a keen focus on enhancing cyber and data security, as well as shifting priorities to innovation-led industry adjustments over regulatory changes. “Enhancing cyber and data security is the number one priority for banks, with 73% planning to invest in technology to mitigate the threat,” reports Finextra from a poll of more than 220 bank executives from Europe, North America, Asia Pacific and emerging markets.
Let’s take a deeper look into these trends...
Stay Current on the Future of Virtual Branch
How Far We’ve Come in the Digitization of Banking
In 2016, reports show that 40% of Americans didn’t physically walk into a bank or credit union for at least a 6-month period. This is a large reason why the number of bank storefronts dropped by nearly 50% between 1995-2015, which can also directly be tied to the rise of online banking in the last decade. Mobile Fintech services that allow people to invest, budget, pay, and crowd-fund are rising to the forefront of financial management. These Fintech organizations surpassed innovation over banking institutions because they were able to be more innovative due to the fact that they weren’t strapped by regulations or brick and mortar physical operations.
It’s predicted that in 2018, we will see a shift in corporate executives’ attitudes regarding regulation at banking institutions.
Innovation and Digitization in Retail Banking
Last year, Efma’s 9th annual Innovation in Retail Banking report studied 250 financial institutions worldwide, both large and small, to learn that smaller banking organizations are at a much lower level of digital maturity than their larger counterparts. This report also found that smaller banking organizations have not prioritized investment in digital transformation and do not have a person dedicated to this cause.
From this report we also learn that for those typically larger organizations who do invest in digital transformation, their top three priorities in order of importance were reportedly:
- Digitizing processes for new and existing products and services;
- Enhancing digital security; and
- Re-imagining the customer journey
Take note that digital security was the second most important priority for digital transformation in banks in 2017, and only a mid-ranked strategy in 2016. It’s also important to note that in 2017, larger organizations invested in highly innovative technologies like the Blockchain. Smaller organizations on the other hand, dedicated most of their investment to digital security, data analytics, and banking APIs.
In 2017, we ended the year understanding that the banking winners of the future will be those who start to leverage digital transformation to offer an unparalleled customer experience. Taking the ‘wait and see’ approach to innovation would not be an option, and in order to remain relevant, banking and financial organizations need to make the investment in their long-term digital future for big and small players alike.
What Will Banks Do in 2018 to Keep Pace or Stay Ahead?
There will be a shift in digital attitudes at financial institutions says a global survey that questioned 221 executives at banks across Europe, North America, Asia Pacific and emerging markets. Due to the increase in innovation in the Fintech sector, results suggest that there will be a shift away from regulatory-driven digital transformation, to “innovation-led change”. Only 19% of these same bank executives believe that they are digitally mature, yet 62% of them plan to reach maturity by 2020. The majority, nearly 60% of bank executives, intend to make the necessary investment to achieve this and will increase spending by over 10% in 2018.
In order to achieve digital maturity, 50% of banking executives from the survey plan to purchase third-party technology. As noted above, despite the focus on innovation, data security is predicted to be the number one technology investment for banks given that 73% of plan to invest in technology to minimize the threat of data breaches. Technologies such as secure, private and encrypted chat or communication apps are needed to protect confidential business data.
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Retail Banking Digitization & Innovation Trends in 2018 and Beyond
Another survey aimed to derive the top 10 retail banking trends in 2018 found similar results. 61% of banking professionals unanimously agreed that the industry will work towards removing the friction from the customer journey, both online and offline. Improving the use of data and analytics, and refining their multichannel delivery model were the next competing priorities that rated high in importance.
So, now that we know the facts, what are your priorities to keep your bank relevant and future-proof? If you’re looking for some tips to get started with mobile banking, branch banking, and increasing your data-security, get in touch with Mobilearth.