Many experts think that 2020 will become a year of greater changes and transformation in financial industry. Let’s have a look at the trends that are expected to disrupt banking and financial services this year and beyond.
Apple Pay, Google Pay, Samsung Pay and other systems have made payments easier and faster for banks and consumers. Their volume is increasing every year, they are available even to those who do not have bank accounts. Some companies and even entire countries declare their plans to completely abandon cash. In 2020, this objective is no longer Utopian.
In the financial market, banks, fintechs and tech companies are fighting for the client. Against the background of such competition, they simply have no other choice but to accept сustomer-сentric сulture as a must. This concept determines the design and essence of a huge number of financial products.
Technology Is Shaping Financial Industry
Technology today serves as a key driver for the development of the financial industry. Today’s business environment increasingly requires aligning your workforce for the new view of what customer centric is. Talented professionals increasingly have IT, Data Science, Programming and Algorithm backgrounds. What matters now is really good data and User Experience (UX). On the other hand, digitalization of the banking sector means a significant reduction in jobs, which can become a serious social problem.
The Human Element in Financial Services
Some areas still need Face-To-Face interactions. These include:
- Consulting engagements;
- Capital raising when it comes to story telling, qualitative analysis and relationships;
- Product development and product management.
In addition, do not forget that some clients prefer face-to-face interaction. And this means it’s not a good idea to replace all functions by chatbots and roboadvisers – for many, it is important to talk with a bank employee. Incidentally, an Accenture study found 64% of consumer is more willing to buy or hire a service if they have previously talked with the brand representative.
Collaboration, Not Competition
Customer demand is reaching peaks it never did before. It forced the businesses to collaborate with others to create products and services that are open-source, non-proprietary and do not lock down users into an ecosystem. How far is this collaboration trend going? PwC sees 82% of current financial service providers increasing partnerships within the next five years. Fortunately, Open Banking provides all nececcary opportunities for it.
New Strategic Priorities for Traditional Banks
Even the most conservative banks cannot ignore the fact that fintech has forever changed the game. Therefore, the basis of their strategies now somehow reflects the following approaches:
- Customer centricity,
- Mobile first,
- Frictionless Customer Experience,
- Long-term planning.
Here are some of them:
- real time payment schemes;
- cloud computing;
- voice banking
- Big data
- internet of things;
- artificial intelligence, advanced analytics, machine learning and natural language processing;
- chatbots and robotic advisors;
- SaaS (Software as a Service);
- RPA that automates business processes.
Financial institutions must do more than invest in cybersecurity. Because of the threat of large cyber-attacks, they must share knowledge and best practices with each other and even work with governments. In addition, they should know how to reach out to the public to help them understand the situation and their role in keeping their personal data safe.
Asia as a Special Zone
First, many startups are now emerging in Asia, thus Asian finance specialists suggest great changes in the field. Second, Asia is going to become a strong competitor in the nearest future, so large organizations tend to expand their business onto this market or establish partnership with local representatives. And thirdly, сhina’s сompanies ready to go global.
It is estimated that around 15% of the workforce of the entire financial industry as a whole is engaged in ‘Compliance’ tasks. Regulatory compliance has become one of the most significant banking industry challenges that’s why Regtech is so important. Some experts even predict that investment in Regtech will increase from $10.6 billion in 2017 to more than $53 billion in 2020.
Fintech & Millennials
Millennials now make up about 35% of the workforce according to an analysis from U.S. Census Bureau data. As they grow in the digital era, Millennials are excellent candidates for future positions FinTech. Moreover, it was a mistake to compare them based on baby boomers’ old metrics and consider them as “the poor generation”. The truth is that they are just choosing to invest in different assets such as technology, and banks and wealthechs should know it.
Expanding Access to Banking Services
Fintech seems to be the solution for many people who have no access to financial services. This means that more and more banks and alternative lenders will come to new regions and revolutionize their offerings to the unbanked or underbanked.