If you think about it, banking innovation is nothing new. Credit cards, debit cards, bank loans, ATMs, and so on would not exist without bank innovation. With online deposits, mobile apps, and e-bill payments becoming the norm, the banking industry is undergoing a massive digital revolution.
There’s a lot more to it than that. To meet end-users’ ever-changing demands and drive growth, the name of the game isn’t just innovation, but speed of innovation. Banks and credit unions that innovate quickly to provide differentiated digital experiences have the best chance of booming in today’s financial services environment.
Significance of digital or online banking
Digital banking refers to the digitization of all aspects of banking, from the front end to the back end. This means that digital banks use artificial intelligence to automate back-end tasks like data processing and administrative tasks. As a result, employees are not under as much pressure to complete daily tasks.
Users can not only make account deposits and transfers remotely with digital banks. However, they also allow them to apply for loans and access personalized money management services more easily. Before transitioning to a digital-only market, the digital banking transformation began with restricted online banking services.
Both traditional banking institutions and tech-savvy startups can provide online banking. It refers to the most fundamental banking functions, such as bill payment and account transfers. Customers typically access their financial accounts through a bank’s website, where they enter specific login information.
Understanding the evolving financial industry landscape is more important than ever as every financial institution strives to become more digitally future-ready. This is why we’re offering our thoughts on the digital transformation trends for the coming year once more.
5 innovative trends for digital banking
To remain relevant and successful in today’s digital world, financial institutions must act and think like technology companies. Let’s look at five trends that financial institutions must capitalize on now and in the future to be successful.
Pursuing to quick wins
Banks and credit unions must continue to make significant investments in the digital banking transformation. Where to invest depends on the current state of digital maturity at each institution and what investments can have the greatest and fastest impact on the customer experience.
While the critical elements for a successful digital banking transformation have not changed. The strategies and tactics for achieving success are shifting, with a focus on ‘quick wins’ that can serve as a solid foundation for future advancements.
For example, using data, analytics, and reimagined back-office operations supplemented with process automation, a lot of focus has been put on improving customer acquisition and retention.
Another focus in 2022 will be on increasing customer engagement across all channels through the introduction of innovative product offerings. They are improving financial management tools and increasing proactive recommendations through the use of data and artificial intelligence (AI). As consumer and marketing technology evolves, engagement will supplant basic transactions as the primary determinant of loyalty.
Driving to mobile-first customer focus
The majority of financial institutions are replacing legacy processes with mobile-first digital banking transformation strategies. Mobile-first digital transformation entails improving products, delivery, and experiences through a mobile lens, with other channels benefiting from this focus. The impact is that business models will need to change to reflect changing consumer and business mobile banking trends. This could revolve around simplicity, speed, and engagement.
According to the report, 89 percent of Americans use mobile banking channels. 70% say mobile banking has become their primary method of accessing their accounts. This simple shift to a mobile-first mindset unleashes a flood of new ideas for delivering insight-driven solutions. This could help with customer acquisition, engagement, relationship growth, and loyalty.
These improvements are less about the device and more about how to use the capabilities that the device can unlock. The shift to mobile-first digital banking is an opportunity to ensure that your business model is customer-centric. It is capable of supporting future digital banking products and solutions.
Innovation through data drive and AI
Data and analytics are the fuel that drives all other aspects of digital banking transformation. In 2022, the most important differentiator between winners and losers in the marketplace is expected to be the combination of data and AI.
The world’s best technology companies are masters at using user data to create personalized experiences that set them apart. Financial institutions have access to some of the most extensive data sets available. These interactive enhancements can perform more involved tasks like a financial concierge in addition to simple tasks like checking balances.
The banking industry will follow in the footsteps of fintech and big tech companies. They’re using AI to make better business decisions and streamline back-office operations by leveraging data. Internally and externally, the ability to deploy insights about product performance, service levels, and customer needs in near real time will add significant value.
Increased focused on ESG and DEI
The newest digital banking transformation trend is a greater emphasis on critical environmental and social issues. As more consumers, investors, and job seekers consider a company’s sustainability efforts to be an important criterion for doing business. ESG and DEI must be considered when developing digital banking.
In 2022, the trend of sustainability will only grow, providing new opportunities for financial institutions to differentiate themselves and meet community needs. Data and analytics will help these initiatives by allowing financial institutions to see the results of their ESG projects. These projects provide public reporting. As a result, sustainability will remain at the forefront of digital banking transformation.
Going back to the back-office process
While consumers are increasingly concentrating on digital device-driven experiences. Far too many financial institutions continue to support processes that rely on people, paper, and outmoded back-office procedures. This may impede the implementation of quick, simple, and seamless solutions.
If this sounds familiar, it’s because this trend combines the previous two around data and AI with a shift to a mobile-first customer focus. In other words, the transformation of digital banking is both additive and complementary. Smaller units within financial institutions can handle value-added tasks like deal origination, basic data collection and distribution, and so on.
To conclude, the main idea of this post is to notify the 5 trending innovations of digital banking in 2022. Financial institutions must adopt technology that allows them to quickly integrate and fully utilize customer data in the world of digital banking. To stay competitive, the financial services industry must embrace digital banking transformation at the speed of light. Internal and external modernization gives banks and credit unions broader advantages that address specific market needs. Other services, such as credit cards, ATM providers, proof of funds providers, and so on, should be upgraded. The above are some powerful and current innovations that should be upgraded in digital banking.