Over the past few decades, the banking industry has undergone numerous changes, thanks to technological advancements and shifts in consumer behaviour. With the constant evolution of the market, it’s crucial to understand the trends that are likely to shape the future of banking.
Digital transformation will continue to drive the banking industry.
Digital transformation has been an essential driver of change in the banking industry, and it’s not likely to slow down anytime soon. With technological advancements such as blockchain and artificial intelligence, banks are redefining how they interact with their customers.
In 2020, COVID-19 accelerated digital adoption in banking as customers were forced to carry out most transactions online. According to McKinsey, the pandemic pushed the digital share of banking revenues to more than 50% for the first time, a significant increase from 35% in 2019. In the next decade, banks will likely continue investing in digital channels and expanding their digital offerings to cater to changing customer needs.
Increased focus on sustainability
In recent years, sustainability has become an essential topic in various industries, including banking. As consumers become more environmentally conscious, they are demanding that companies take a more significant role in preserving the planet. In response, banks are starting to integrate sustainable practices into their operations and investing in sustainable technologies.
For instance, many banks are setting targets to reduce their carbon emissions and investing in renewable energy projects. In the next decade, banks will likely continue to focus on sustainability and integrate it into their core business strategies.
Rise of challenger banks
Challenger banks, also known as neobanks, are digital-only banks that provide customers with a mobile app and other digital channels to carry out their banking transactions. These banks have been gaining popularity in recent years, especially among younger generations who prefer a more personalised and convenient banking experience.
According to a report by Accenture, the number of customers using digital-only banks will triple by 2025, reaching 340 million globally. In the next decade, challenger banks will likely continue to disrupt the traditional banking industry by offering innovative products and services that meet changing customer needs.
Shift to Open Banking
Open Banking is a concept that allows third-party developers to access financial data through open APIs (Application Programming Interfaces). This data can be used to create innovative applications and services that enhance the customer experience. Open Banking has been gaining traction in recent years, and it’s likely to be a significant trend in the next decade.
According to a report by Accenture, Open Banking could generate up to $7.2 billion in annual revenue by 2022. In the next decade, banks will likely continue to embrace Open Banking and collaborate with third-party developers to create innovative products and services.
The emergence of digital currencies
Digital currencies, such as Bitcoin and Ethereum, have gained significant attention in recent years, with their values skyrocketing in a short period. While the use of digital currencies is still limited, they are gaining traction as a viable alternative to traditional currencies.
In the next decade, digital currencies could potentially disrupt the traditional banking industry by offering faster, cheaper, and more secure transactions. However, there are still significant regulatory hurdles to overcome before digital currencies can become mainstream.
The banking industry is undergoing significant changes, and the next decade promises to be an exciting one. As technology continues to evolve, banks will need to adapt and innovate to meet the changing needs of their customers. With the rise of digital transformation, sustainability, challenger banks, Open Banking, and digital currencies, the future of banking looks promising. It will be interesting to see how banks will navigate these trends and leverage them to create innovative products and services that meet the needs of their customers.