In recent years, customer interactions with banks have undergone a significant transformation. The emergence of digital-savvy fintechs and neobanks has made digitization imperative for traditional banks. To remain market leaders, banks must adopt a progressive approach to digitization, prioritising elements that contribute to a smooth customer experience.
The evolving landscape is guiding banks toward becoming digital-first financial organisations. They are leveraging their established distribution network and the customers’ trust in them. This strategic move positions banks to thrive in the digital age. Undoubtedly, the past two years have intensified banks’ focus on digitization and customer-centricity, reinforcing the need for continuous adaptation in the ever-evolving financial landscape.
Customers increasingly value empathy, loyalty, and brand-emotional connections in the present scenario. There is an agreement that businesses should reevaluate their operations and societal contributions. As a result, banks are now urged to expand their outlook and enhance the digital experience by investing it in emotional connections. Here, we delve into digital banking trends for 2024!
Digital Banking Trends for 2024
Let’s read the top level digital banking trends for 2024;
Open Banking Evolution
The banking landscape is witnessing the rise of an API economy, offering vast potential for innovative financial services. Open banking stands out as a prominent global trend, allowing banks to share financial data securely with fintechs and tech-forward companies via APIs (Application Programming Interfaces), contingent upon customer consent. This collaborative approach empowers banks to partner with other financial institutions, providing customers access to comprehensive financial services on a unified platform.
Elevated Focus on Customer Experience
A seamless and consistent banking experience has become paramount, spanning activities such as completing loan applications, contacting customer helplines, or visiting a bank branch. Customers seek a deep understanding of their needs, and financial institutions are expected to address their financial goals effectively. Achieving this requires banks to be more intuitive, incorporating personalization, leveraging data-driven insights, and anticipating customer needs. Banks embracing this customer-centric approach in their digital transformation journey are poised to maintain a robust market presence.
Enhancing Cybersecurity Measures
As digital banking usage continues to rise, the importance of cybersecurity becomes more pronounced. Banks proactively invest in advanced cybersecurity solutions to protect client data and financial assets. This includes the implementation of multi-factor authentication, biometric security features, and real-time monitoring of suspicious activities.
ESG Integration and Sustainable Practices
Environmental, social, and governance (ESG) considerations are gaining prominence in the banking sector. Customers increasingly seek banking solutions that align with their values, prompting banks to respond by incorporating ESG principles into their operations. This encompasses environmentally conscious lending practices, investments in sustainable initiatives, and financial support for socially responsible enterprises.
Fostering a Unified Ecosystem
A challenge prevalent in contemporary digital banking systems is the need for uniformity. Traditional banks undergo digitization in stages, resulting in a fragmented user experience across their ecosystem channels. Visual elements across various applications and websites exhibit disparities in appearance and functionality.
The Internet banking website, mobile apps, and ATMs maintain distinct interfaces that need uniformity. Take, for instance, the State Bank of India, which offers multiple apps for investment, payments, and card management, along with a unified app consolidating these features. However, each app boasts a different UI and design system, distinct from the website’s user experience.
Revamping Measurement Strategies
With a prominent focus on customer experience, a significant shift towards experience-driven metrics is expected in most financial organisations to assess their performance. The implementation arrows for digital banking products will measure their operational efficiency and, more importantly, their effectiveness in engaging with customers.
Measurement strategies become one of the top digital banking trends for 2024. These new metrics will delve into user feedback, encompassing comments, ratings, and recommendations, providing a holistic view of customer satisfaction. Financial organisations can transition to these modern metrics without necessitating significant new investments. The range of metrics for evaluation includes:
- App store ratings.
- Net promoter scores.
- Customer lifetime value.
- Reasons prompting customer support contact.
- App retention and switch rates.
- Active customer volume.
- Various other parameters are essential for a comprehensive performance assessment.
Enactment of Artificial Intelligence (AI) and Machine Learning
The essence of artificial intelligence and machine learning in digital banking operations is increasing. These technologies, harnessed through chatbots and virtual assistants, empower banks to automate various processes, enhance fraud detection mechanisms, and elevate customer service standards. AI-driven credit scoring and risk assessment expedite loan approval processes, improving banking operations’ efficiency.
Adoption of Blockchain and Cryptocurrency
Blockchain technologies and cryptocurrencies are gaining in the financial sector. Banks are actively exploring ways to leverage blockchain for secure and transparent transactions. Additionally, numerous financial institutions now offer cryptocurrency custody services and examine the potential for central bank digital currencies (CBDCs). This integration marks a transformative shift in the landscape of financial services.
Expansion of Banking as a Service(BaaS)
The momentum behind banking as a service is growing, enabling traditional financial organisations and non-financial businesses to integrate banking and financial services into their platforms effortlessly. Non-financial companies, including e-commerce firms, can now offer payment processing, lending, and savings accounts. This integration improves customer loyalty and creates new avenues for revenue generation. BaaS catalyses startups and fintech companies, allowing them to introduce innovative financial products and thereby rapidly foster entrepreneurship.
The above-mentioned digital banking trends for 2024 underscore the industry’s commitment to meeting customers’ ever-evolving demands and expectations in an increasingly digital and interconnected landscape. Financial institutions can position themselves for success in digital banking by proactively embracing and adapting to these transformative changes.
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