Four trends impacting the future of banking
The Brands2Life US team recently attended a panel discussion focused on reimagining the future of banking hosted by the Silicon Valley and San Francisco chapters of the Public Relations Society of America (PRSA). The event covered the current state of the banking industry and how it’s expected to change over the coming years.
Panellists Alain Neyroud from IBM; Melissa Lowry from Early Warning/Zelle; Al Pascual from Javelin Strategy and Research; and Brian Ziff-Levine from First Tech Credit Union, shared their insights on the top trends impacting the market, consumer mindset, and thoughts on the future.
Key takeaways are summarized below:
Customers are experiencing the benefits of big data in banking
There are a number of positive innovations that technology has brought to the banking space, but concerns over security persist. Despite these concerns, customers are starting to see the value of having a trusted financial institution understand their purchasing habits.
Using data helps to predict customers’ needs for the future, breaking down barriers.
The panellists discussed that looking to the future, people will be happy if they will no longer need to use ‘plastic’ for transactions. Amazon is a good example of this, as customers do not need a physical card to make a purchase. Having simple and convenient alternative forms of payment is key in meeting customer expectations and access to consumer data plays a role in making this a reality.
Blockchain will have a large role to play
It’s hard to have a conversation about the future of banking without discussing blockchain and cryptocurrency, it is top of mind for everyone in the financial industry. Panellist Alain Neyroud is a Blockchain Garage Architect at IBM, and discussed that there’s currently no expert in blockchain as it’s still too young and moving too fast. However, the main draw of blockchain is that it provides more security and the ability to execute business processes in a very effective and efficient way. In the payments and banking space, there is a lot of opportunity to leverage blockchain technology. Alain mentioned that in the past two years, 15 per cent of banks have invested in blockchain technology, and it is expected that in the next two years this number will increase to 50 per cent.
Important topics aren’t attracting enough attention in the industry
Although blockchain is frequently discussed, there are many topics not getting enough attention. As customers demand that their banking experiences be more intuitive, it has become more evident that legacy banks with older systems are having a hard time keeping up. As a result, there is a lot of room for growth in the UX and UI layer in banking systems.
In addition, the panellists argued that if customers have better visibility of banking processes, they will develop greater trust in banking systems. Customers are more aware of how to keep their financial information secure and are turning back to institutions they trust. After the Equifax breach, people became sceptical about sharing their information or logging into accounts through a platform like Facebook. Customers want to leverage relationships they already have and trust with their banks.
Banks and FinTech have a bright future together
Rather than FinTech companies competing with legacy banking institutions, many are partnering with banks to help them enter the market. As a result, both sides have seen significant benefits, including their customers. Most traditional banks now have innovation labs- typically located in Silicon Valley – whilst some are partnering with large technology companies, such as IBM. When banks invest in Silicon Valley they are able to speed up their learning curves and quickly adapt to customers’ needs in the ‘immediate’ world we now live in. The main factor moving forward is that security to needs be the first priority while providing a seamless experience for customers.
The banking industry is going to look significantly different over the next decade. As a result, it is important for companies to be transparent with customers and have open communication to build a firm level of trust as they introduce new technologies. As banks and FinTech companies continue to innovate, customers must remain the priority and be informed directly using straightforward language outlining the changes that will impact them. This will go a long way in developing a positive brand impact and reducing scepticism of industry innovation.