In December, leading consulting companies traditionally release customized market researches for each sector in various industries. These reports give companies a profound background to predict the changes that await the particular market and consumers in 2021. The financial services industry is not an exception. Let’s highlight some future trends that will be relevant to the banking sector.
Redefining Digital Platform Ecosystems
According to EY research, business structures will work to create financial and digital platform ecosystems.
Banks of the future will become ecosystems based on digital online platforms. This is a single space in which the end customer is provided with a wide range of products and services on special terms, and the financial structure in it provides new business opportunities.
Digital ecosystems that partner with each other to deliver more value to customers are changing the definition of banking. The digital transformation of banks is an objective process that is taking place before our eyes. However, major transformations taking place at the client level must be supported by appropriate technological modernization of banking IT systems.
The EY study revealed that banks around the world have significant differences in how they design the APIs that underlie these ecosystems. In order to successfully participate in such ecosystems, financial institutions need to choose the corresponding ecosystem business model and five fundamentals of ecosystem interaction (a robust API strategy, monetization, partnership building, regulatory compliance, and talent recruitment) have to be followed.
IT Solutions for Compliance
Compliance risk management is becoming one of the main challenges for the banking and financial systems around the world.
The multimillion-dollar fines imposed by regulators in recent years are forcing banks to look for solutions that, on the one hand, allow them to comply with the requirements of regulators, and on the other hand, do not greatly complicate the process of access to financial services for the consumer.
This is the area where IT solutions may help. Modern technologies such as artificial intelligence (AI), blockchain, Big Data, machine learning (ML) will be actively implemented in such a conservative process as compliance.
In 2018, Oracle conducted The New Digital Demand in Retail Banking study, which showed that 69% of consumers would like to receive financial services “seamlessly”, that is, without spending time studying them and any kind of administration, especially visits to branches. However, the services must be tailored to the individual needs of the financial institution’s client.
At the moment, various automated systems help the marketing departments of financial institutions collect information about customers. But there is a problem with its correct interpretation, especially when it comes to the “digital avalanche”. AI technologies will help solve this problem.
In 2021, services that are able to analyze customer behavior and give him financial advice will be actively developed.
By the end of 2020, AI is able to provide business advice and plan large purchases in a way that is comfortable for the client. The word “comfortable” in this case may mean that the amount of the monthly payment does not significantly impair consumption habits. In general, we can confidently talk about the sustainable development of such services, which will grow into a boom.
To sum it up, the main trend in the banking sector for 2021 is the same as in 2020. Banks are actively developing their IT direction, and the COVID-19 pandemic has only accelerated this process. Market trends are changing constantly, so it is crucial to keep up with the industry’s shifting pace.