The Bank of the Future?

The world of banking is changing faster than ever.

Faced with technology developments (e.g. Bitcoin and NFTs), and evolving customer demands, banks must think carefully about their future and the strategy they need to remain responsive and relevant.

As well as facing a more competitive landscape with new market entrants, banks are also working within an ever-broadening ecosystem in order to help access new technology, create new products and services, and grow revenue with an entirely new customer base.

So, what will the ‘future bank’ look like?

The lines between banks, ‘fintechs’, and big tech companies will continue to blur. Technology companies that would not be classified historically as ‘fintechs’ are working to gain more control of business banking and payments.

But the real change is being driven by the customer. Changing customer behaviours mean banks need to curate unique journeys and propositions to meet evolving customer expectations.

The future bank will need to combine digital speed and convenience, in a way that is thoughtful and caring, at crucial moments in the customer journey. This is already happening in payments and will gradually creep into lending and savings.

Banks will also leverage ‘open banking’ to become more customer-oriented and tech-savvy.

Historically, banks have been big collectors of data, but not great users of it. Greater use of data analytics, utilising cloud and AI will facilitate a better understanding of customers, identification of business opportunities, and reduction of costs.

Payments data is at the core of banking. The future bank will increasingly convert data into insight, and insight into sustainable value, to create new revenue streams and build trust with customers.

Collaboration within the payments ecosystem will allow banks and fintechs to play to their strengths. Through partnerships or investment relationships, banks will work with fintechs to better understand and influence payments technology.

Banks will also incorporate their inherent advantages – strong balance sheets, deposit funding, customer data, regulatory expertise, and trusted local brands – to make the payments experience more personalized.

Banks will increasingly offer tailored, highly personalised customer experiences – all powered through data and technology. Banks have historically operated on an inside-out basis, creating products and solutions to fit their businesses, rather than fitting their businesses to customers.

This fundamentally limits integration across products and services and leads to inconsistent customer experiences. It is also opposite to how fintechs operate, creating solutions and entire business models centred around customer experience.

Banks are under pressure to go further and act faster than ever before.

They are making transformative changes to become more competitive in a rapidly evolving marketplace. They are also adhering to increasingly challenging regulation, while helping to solve societal challenges. And they are doing all of this while operating in a low revenue-growth environment.

In their race to innovate and achieve scale, banks are grasping a once-in-a-generation opportunity to accelerate transformation and define their own future, or risk become replaced by Amazon Banking.