The whole banking industry is now going digital. How did we get here, and what lies in store for us moving forward? We can learn from earlier waves of transition to predict the future. So let’s start with the channels for banking.
Banks’ Websites
In the 1990s, web-based services became popular. The earliest mobile banking services, which used SMS and WAP for essential account services, also came into existence around the same point in time.
However, things took off with the introduction of the smartphone and app-enabled banking in the 2010s. People used a combination of web and mobile channels for most of that decade.
Around 80% of customers say that today, their access their bank accounts through smartphones. However, banks are experimenting with cutting-edge technologies like wearable gadgets for transfers, notifications, and alarms, to stay ahead in the race.
Commercial Lines
With retail banking, business line change first began. This was caused mainly by the proliferation of challenger banks and fintech startups providing attractive services, but open banking’s introduction in 2016 gave it a substantial boost.
SME banking, fueled by the rise in gig economy employment and startups in the 2010s, was the second banking sector to transform. Fintechs have taken the lead in this sector since traditional banks underserve this market.
Wealth management, a branch of banking that has continued to use manual procedures into the current decade, is the driving force behind SME banking.
However, lockdowns prompted by COVID-19 were the main factor in the business line’s virtualization. As a result, over half of financial managers in the US and UK have boosted their usage of digital technologies post-COVID.
Corporate banking is the most digitally backward sector. However, as businesses expect from their bank’s digital experiences that match the data and AI-enabled apps they are accustomed to in other parts of the company, change is already beginning. Financial institutions’ future success in modernizing corporate banking will depend on their capacity for innovation, client satisfaction, and market share.
Key Lessons
This condensed history of banking’s digital transition offers crucial insights for future innovation. Advancements can only be made when banks’ needs, technological advances, and client needs are all combined. Future initiatives should focus on business drivers and intended outcomes rather than concentrating solely on technology enablers. The banking industry of tomorrow will be created at this intersection.